Water Demand Management Strategy and Implementation Plan For INDORE

Water for Asian Cities Programme
Water Demand
Management Strategy
and
Implementation Plan
for
INDORE
The Energy and Water Resource Planning Government of

Resources Institute and Conservation Madhya Pradesh
Water for Asian Cities Programme
Water Demand
Management Strategy
and
Implementation Plan
for
INDORE
Part – I
Technical Aspects
Part – II
Financial, Institutional and Policy Reforms
ADB
© United Nations Human Settlements Programme (UN-HABITAT), 2006
All rights reserved
United Nations Human Settlements Programme (UN-HABITAT)

P.O. Box 30030, Nairobi, Kenya
Tel: +254 –20 –7623588
Disclaimer
The designations employed and the presentation of the material in this publication do not imply
the expression of any opinion whatsoever on the part of the Secretariat of the United Nations
concerning the legal status of any country, territory, city or area, or of its authorities, or concerning
delimitation of its frontiers or boundaries, or regarding its economic system, or degree of
development.
UN-HABITAT does not owe any responsibility, whatsoever, for incorrect/inappropriate information
provided by the Indore Municipal Corporation and the Public Health Engineering Department, or in
documents, maps, or quoted reports of Research and Consultancy Organisations. No material in this
publication can be reproduced or presented in any form or by any means without prior permission
of UN-HABITAT.
The information developed, analysis, conclusions and recommendations of the Publication do not
necessarily reflect the authenticity and views of the United Nations Human Settlements Programme
(UN-HABITAT), the Governing Council of UN-HABITAT or its Member States.
HS Number: HS/920/07E
Acknowledgements
The Publication has been prepared under the overall guidance of Mr. Kalyan Ray, Senior Advisor,
Office of the Executive Director, UN-HABITAT and close supervision of Mr. Andre Dzikus, Programme
Manager, Water for Cities Programmes, Water, Sanitation and Infrastructure Branch of UN-HABITAT,
Nairobi, with the support of Dr. Kulwant Singh and Mr. Aniruddhe Mukerjee of UN-HABITAT.
UN-HABITAT owes a great deal to Water Resources Planning and Conservation (WRP), South Africa in
commissioning this Project and the support provided by The Energy Resources Institute (TERI).
UN-HABITAT would like to acknowledge the contribution of Indore Municipal Corporation, the Public
Health Engineering Department and all other concerned Organisations for their innovative inputs
into the Project.
2
Message
Jayant Kumar Malaiya

Minister
Urban Administration & Development
Housing & Environment
Government of Madhya Pradash
UN-HABITAT under the Water for Asian Cities Programme in India is working
in Bhopal, Gwalior, Indore and Jabalpur in support of the ADB financed Urban
Water Supply and Environmental Improvement Project of Government of
Madhya Paradesh for the improvement and expansion of urban water supply,
sewerage and sanitation, water drainage and solid waste management in
these cities. All four cities, have substantial population presently living in
slums having difficulties in accessing both water and sanitation facilities.
UN-HABITAT has undertaken the Water Balance study in the four cities which
revealed that the Non-Revenue Water (NRW) is between 33 and 60% in
Bhopal, Gwalior, Jabalpur and Indore. The reduction of NRW can lead to
availability of surplus water for the population in the slums, which are
presently not having sufficient access to piped water supply.
I am pleased to learn that UN-HABITAT has developed a strategy and action

plan on Water Demand Management (WDM) jointly with Urban Water Supply
and Environmental Improvement (UWSEI) Project, Madhya Pradesh which
proposes technical, financial and institutional measures to reduce NRW.
I hope that the implementation of the strategy and action plan will help the
local bodies in improving the water supply condition of the four project
cities and attainment of the Millennium Development Goals.
Jayant Kumar Malaiya
3
Preface
The most important source of water for the city of Indore is the Narmada Water Supply Project
which involves pumping water some 70 kms from Narmada River. The estimated water availability
for the city is of the order of 199.5 MLD at maximum and 171 MLD at minimum to serve over
1.5 million population. A significant fraction of the water is also supplemented by ground water
through tube wells. The actual situation is much less with estimated per capita availability of around
84 lpcd at maximum and 72 lpcd at minimum. The water supply in the city is unsatisfactory on
account of high losses and inefficiencies in the system.
The growth of urban population, estimated at 4% to 5% per annum, and the rapid urbanisation has
significant influence on water demand and exerting pressures on the available water sources, leading
to over exploitation of groundwater resources. Around 68 per cent of city’s population receives
water between one or two hours every alternative day, while the other areas augment supplies by
water tankers. Many residents use their own tube wells. Non-revenue water is estimated at around
30 per cent. Absence of data on leakages and the reliability of the available basic data on operational
aspects of water supply has been the major concern in arriving at water balance audit. The water
supply problem in the city of Indore is attributed more to the lack of infrastructure and current
management practices rather than lack of water availability.
UN-HABITAT in partnership with Water Resource Planning and Conservation (WRP), South Africa,
commissioned the Project to develop a Water Demand Management Strategy and Implementation
Plan for the city of Indore to provide useful directions to several other initiatives already being
facilitated as well as strengthen the capacities of The Energy Resources Institute (TERI), India,
for associating in such projects. WRP has prepared the technical aspects of the Water Demand
Management and Implementation Plan, while the financial, institutional and policy reforms
have been developed by TERI.
The Publication presents a comprehensive reforms package by developing Water Demand

Management strategy and implementation plan for the city of Indore involving institutional, financial
and technical issues in water supply and is aimed at the efficiency improvements in the management
and utilization of water. The focus is mainly on the water balancing systems, developing information-
base on GIS platform, capacity building and approaches for reducing unaccounted-for water, for an
efficient and effective distribution of available water supply. The strategy and the implementation
framework illustrated in the publication would not only enhance awareness but also provide the
basis for formulating effective Water Demand Management policies.
Andre Dzikus
Programme Manager
Water for Cities Programmes
UN-HABITAT
5
Water Demand
Management Strategy
and
Implementation Plan
for
INDORE
Part – I
Technical Aspects
7
Contents
Executive Summary 11
1. Introduction
1.1 Purpose of this Report 19
1.2 Project Area 19
1.3 Water Demand Mamagement Strategy 21
1.4 Methodology 22
2. Water Demand Management Strategy
2.1 District Metered Areas (DMAs) 23
2.2 Bulk Management Meters 24
2.3 Bulk Revenue Meters 28
2.4 Domestic Consumer Meters 30
2.5 Monitoring of Unaccounted-for water in each zone 32
2.6 Water Audit 33
2.7 Pressure Management 33
2.8 Mains replacement programme 34
2.9 Active and passive leakage control 34
2.10 Planned Maintenance 36
2.11 General education and public involvement 37
2.12 Payment for water and illegal use 38
2.13 GIS System 39
2.14 Capacity Building 40
2.15 Pilot Projects 40
2.16 Legislation 41
2.17 Water Harvesting 42
2.18 Sewage Reuse 42
2.19 Retrofit Internal Plumbing 43
References 44
Appendices
Appendix A: Schematic Layout of bulk water supply in Indore 45
Appendix B: Repair of leaking pipelines 46
Appendix C: Sizing and design of meter installation 49
Appendix D: Consumer meter test procedure 53
Appendix E: Meter cost estimates 56
Appendix F: Simple Method to measure Water Pressures 58
Appendix G: Design Drawing for a 100 mm diameter mechanical meter installation 59
Appendix H: Water Audit for Indore 61
Appendix I: Paper on Accuracy Limitations of Infrastructure Leakage Index (ILI) 68
References 76
9
Abbreviations
ADB Asian Development Bank

AZP Average Zone Point
CAD Computer Aided Design
DMA District Metered Area
GIS Global Information System
ILI Infrastructure Leakage Index
IUDMP Integrated Urban Development in Madhya Pradesh
IMC Indore Municipal Corporation
IWA International Water Association
kl Kilo Litre/ Cubic meter
km Kilo Meter
MIS Management Information System
MNF Minimum Night Flow
Ml/d Mega Litre per day (1 Mega Litre = 1000 Kilo Litre)
m3 cubic meter/ Kilo Litre
NRW Non Revenue Water
PRV Pressure Reducing Valve
Rs. Rupees
UAW Unaccounted-for Water
WC Water Conservation
WDM Water Demand Management
Note:
Rs. 1 crore: Rs. 10 million
Rs. 1 million: Rs. 10 lakhs
Rs. 10 lakhs: Rs. 1,00,000
10
Executive Summary
Introduction
The UN-HABITAT has embarked on an investigation to develop a Water Demand Management strategy
for the city of Indore that will hopefully provide useful support and direction to several other initiatives
being supported and facilitated by other organisations including the World Bank and Asian
Development Bank. The strategy proposed in this document should be considered as a draft strategy
which will require the support and “buy-in” of both the water utility as well as the different funding
organisations involved in the upgrading of the Indore water supply. For this reason, the WDM strategy
has been restricted to key focus areas which are essential to the efficient management of any water
supply system.
Where possible, specific actions have been suggested which will help to improve the situation and
must be implemented at some stage if any meaningful progress is to be achieved. It must be noted,
however, that without major augmentation and very significant investment in the water supply
infrastructure, the possibility of providing a 24-hour supply throughout the City of Indore is unlikely
to be achieved in the near future and unrealistic expectations in this regard should not be raised.
The WDM Strategy suggested for the City of Indore is considered to be both practical and methodical,
concentrating on key essential issues rather than the “nice-to-have’s” which are often included for
areas with continuous supply.
Due to the fact that the water supply to Indore is unlikely to be augmented before 2010, it is not
practical to suggest certain measures until such time as the new supply is available. For this reason,
the proposed WDM strategy has been split into short term actions and longer term actions.
The short-term actions should be considered as a matter of urgency to be implemented as soon as
possible and certainly within the next 5 years while the long-term actions are of a lower priority
(although still important) and should be implemented over a 10 to 20 year time frame.
Addressing the problems in the Indore water supply system will take many years and is unlikely to
be completed within less than 20 years. The actual progress will depend upon the commitment of
the governing institutions as well as the availability of the funds required to complete the work.
Water Demand Management Strategy

A summary of the aspects covered in the WDM Strategy is provided in Table 1.
11
Table 1: Summary of Water Demand Management Strategy
Item Short Term Recommendations Long Term Recommendations
District After recommendations were made by WRP In the long term, the whole of Indore
Metered Areas (in 2005) regarding sectorising the supply should be sectorised into DMAs of
(DMA) network in Indore the IMC has started with a between 2000 and 5000 properties.
process to split Indore in 12 large zones The practicality of this should be
(DMA’s). (March 2006). investigated for each area separately
and should be checked with
Once the new Narmada Pipeline has been
Engineers from the IMC.
constructed it is recommended to identify
one or two smaller pilot DMA’s (between 2000
and 5000 connections) where the supply
could possibly be sustained for longer periods
(i.e. over 12 hr /day). These pilot DMA’s could
then be used to test several of the WDM
recommendations on a smaller scale before
applying it to the whole city area.
Bulk Bulk meters should be installed on inlets It is recommended that bulk meters
Metering and outlets of all water purification works. be installed on the outlets of all
7 Meters in total. (See Appendix A for elevated water tanks as well as at the
schematic drawing on proposed meter entrance to all zone-metered areas –
locations). the details of which must first be
clarified with the IMC Engineers.
Approximately 11 meters should be installed
This task is likely to take place over a
at selected positions on the trunk mains as 10-year period.
shown in Appendix A. The suggested location
of these bulk meters are shown but must be It should be taken into account that
confirmed by the Engineers from the IMC. water meters will not be accurate if
water supply is not sustained (i.e. air
The inlets to the initial 12 management zones in pipelines). The metering should,
should be metered. ( These zones were therefore, be prioritised to meter the
identified by IMC). These meters should positions with constant supply.
preferably be placed upstream of the zonal
valves that are closed on a daily basis to
distribute the water – to ensure that the
meter will always be filled with water.
Bulk Revenue It is recommended that the meters for the top It is recommended that all bulk
Meters 10 consumers are replaced as soon as possible revenue meters are replaced and a
with reliable meters capable of being logged. proper billing system is established
to streamline the billing system.
The top 50 consumers in Indore should be
metered and billed accordingly based on the Standards for meter installations and
meter readings. (Consumers that was calibration procedures should be
previously un-metered). This should also developed by/for the water utility to
include metering some of the larger ensure that all revenue meter
government buildings to show that IMC is installations are of an acceptable
also monitoring the water supply to their own quality and of similar design.
buildings.
A bulk meter should be installed at the point
where the water tankers are filled each day.
12
Domestic It is recommended that two or three pilot No recommendations on the long-

Consumer areas are identified where domestic meters term implementation of domestic
Meters
can be installed. Areas with approximately meters can be made at this stage.
50 to 100 properties will be ideal for this Ideally every connection should be
exercise since the cost of the meters and metered. In the case of Indore,
installations will be relatively small. Such however, it has yet to be shown that
metering will enable the water utility to full scale connection metering is
evaluate the value of domestic metering at feasible and the results from the
a small scale before committing to full scale pilot studies should be assessed
domestic metering which may or may not before approving such a large
be successful in Indore. investment.
The domestic metering “Pilot Projects” will

have a 2nd use in that they will help to
establish the daily or monthly water use per
connection or per capita – one of the key
uncertainties in the current estimation of
water demands in the system.
Monitoring Once the first phase of bulk meters are It is recommended that the level of
UAW installed the process of monitoring should leakage in all discrete zones be
commence. The bulk meters should be analysed annually using standard
logged and analysed where possible. techniques (e.g.analyses of minimum
Unfortunately the minimum night flows can night flows etc) as and when such
only be determined once meters are installed zones are established and the
on the outlets of the water towers. appropriate bulk management
meters installed.
Water Audit The data used to calculate the Infrastructure It is recommended that the water
Leakage Index (ILI) should be verified and balance/audit be continuously
updated where necessary by the Engineers of updated to incorporate the latest
IMC. The calculated ILI for Indore was 400 and most accurate data. Two
which is one of highest in the world. It might electronic copies of the software
be that with more accurate data the ILI would have been provided to IMC for this
come down to a more realistic value. purpose.
See Appendix H for details
Pressure It is recommended that the water pressure be No long term recommendations

Management monitored at selected points in the can be made with regard to
distribution system to establish the daily pressure management at this time.
pressure profiles experienced in the system.
It may be possible to consider some form of
pressure management at certain points in the
system but this cannot be established until
some accurate pressure information has been
collected.
Once pressure information is available it

might be considered to reduce pressures in
selected positions only during night time.
13
Mains It is recommended that a single policy It is recommended that the value

Replacement regarding mains replacement be developed of the water supply system is
for the City of Indore in which a target assessed and that 2% per annum
percentage of mains replacement per year is allocated to maintenance and
should be provided. This would involve using repair from which the mains
GIS coverage for the full Indore area and replacement programme can be
highlighting all pipes of different ages, funded.
materials, conditions and number of bursts.
The most critical sections of pipe could then
be identified and prioritised for replacement.
Active and After the initial visit of WRP to Indore (2005) A full-time active leakage control
Passive Leakage the IMC has started with a process to identify team (or teams) should be
Control and fix visual leaks in the distribution system. established to carry out sounding
It is recommended that IMC take this initiative at regular intervals – (annually if
further and that full time leak detection teams possible).
be established.
It is recommended that personnel be trained
in the art of leak detection and repair and that
a leakage control team (or teams) be
established within the water utility.
It is recommended that the whole distri-bution
system is surveyed using normal simple
sounding techniques. (Sounding can only be
undertaken during times of water supply).
The visible leaks on the Narmada pipeline
should be repaired. Guidelines to repair
leaking pipelines under pressure are provided
in Appendix B. These guidelines should be
evaluated and used on the discretion of the
engineers from the IMC.
Planned It is recommended a valve audit be undertaken It is recommended that all

Maintenance for all valves in the system. They should be components of the water
inspected carefully, numbered and described distribution system are examined
properly – i.e. type of valve, size, approximate and a long term asset management
age, and condition. Any leaking valves should plan is developed in which the
be rated according to the level of leakage so planned maintenance of the water
that repairs can be properly prioritised to supply system will be an integral
ensure that the major leaks are repaired first component.
after which the smaller leaks can be repaired.
All butterfly valves being used on a daily basis

to control the flow of water from one area to
another should be checked to ensure that
they are water-tight and replaced if necessary
with high quality gate valves which are more
appropriate for such applications.
14
Education The effectiveness of the “Indraroot” cell as a The possibility of incorporating

and Public public awareness instrument should be water conservation in the school
Involvement investigated. The aim should be to improve the curricula should be considered – the
programme continuously. Queensland model (Australia) is
possibly the best case study in this
All consumers should know the phone number regard and can be duplicated in
to report leaks. This can be achieved through Indore if given political and local
a variety of measures such as providing government support.
calendars to all registered consumers with the
necessary contact numbers.
A schools water saving campaign should be

implemented whereby all scholars are
informed of the water situation in Indore and
how the available water in the home and
school can be used efficiently.
Illegal Use of It is recommended that the water utility All illegal connections should be
Water develop a sound policy for addressing the eliminated from the system.
issue of illegal connections which is fully
supported by top management and
politicians.
The utility should undertake a full scale

exercise to identify and remove all illegal
connections – replacing them with legal
connections if appropriate.
GIS System TERI has developed a draft GIS system for Collect plan books on an annual
Indore (as used in the 2-day WDM workshop basis and make necessary changes
in Indore – March 2006) based on the available on the electronic system; and
CAD information. It is recommended that IMC
should use this draft system as a starting point Obtain regular updates of cadastral
and that it should be continually updated, information and make necessary
corrected and improved. changes to GIS system.
Prepare plan books for operations staff.
Capacity A 2-day training programme on various WDM All training requirements should
Building initiatives has been presented by WRP and TERI be identified and co-ordinated by
to delegates of IMC in March 2006. water utility staff.
A WDM unit should be established within the
water utility and further detailed training
provided to the personnel.
A leakage detection team should be trained
in the art of leak detection and repair of leaks.
A meter management team should be
established and trained in the use, installation
and repair of water meters.
15
A GIS team should be established to capture

and manage the GIS coverages for the entire
water supply network. Appropriate training
on GIS may be required.
Training on the operation and maintenance

of purification and sewage treatment facilities
should be provided where necessary.
Pilot Projects It is recommended that several pilot projects All pilot projects whether
are undertaken to test the use of domestic successful or failures should be
meters. Ideally each pilot project should use properly documented for future
at least 100 (Number) meters and several such reference. In the case of successful
projects can be undertaken to assess the projects where savings were
reliability of different meters as well as to assess achieved, they should be revisited
the per capita use for different levels of service. after 3 years to determine if the
initial savings achieved were
A pilot project should be undertaken to assess
sustainable or temporary.
the potential for providing 24-hour supply.
Once again a small area should be identified
which is discrete and supplied from a single
supply pipe – which in turn should also be
metered. The area should be supplied with
water continuously until such time as the
water being supplied into the area stabilises.
The minimum night flow can then be
determined and the true level of leakage and/
or wastage can be assessed. This information
is very important when considering the
possibility of providing continuous supply.
This area can then be used to test various
other WDM measures such as leakage
detection and even pressure management
if the pressures are sufficient.
Legislation Local bye-laws are required to encourage Provincial or national legislation is

water use efficiency in the home and at required to back-up the local
commercial properties within Indore. legislation and must be promoted at
Penalties should be imposed for deliberate a national level.
water wastage.
The bye-laws must be enforced with vigour.
Water It is recommended that the effort on water The implementation of rain water
Harvesting harvesting is maintained and that the harvesting tanks for general
campaign be widened to cover other aspects consumers should be investigated.
of water saving within the same facility. A commendable project has been
undertaken in Sri-Lanka where the
local communities were trained to
build their own concrete rainwater
harvesting tanks.
16
Sewage Reuse It is recommended that a scoping exercise be A sewage reuse project should be
undertaken to assess the possibilities for implemented.
sewage re-use in Indore. This study should
investigate the scope for both industrial use as
well as agricultural use. With regard to
agriculture, it appears that various crops can be
considered including cotton and sugar cane
amongst others. On the industrial side, many
industries might use treated sewage which can
be very cost effective compared with water
being pumped from the Narmada River.
Retrofit Internal Undertake visual leak surveys in all municipal Investigate the potential for
Plumbing buildings, schools, police stations etc. household retrofitting projects as a
pilot project.
Repair all leaks identified in these buildings
and remove wasteful devices (e.g. Tip Tray
Urinals).
Implement a continuous leak survey and repair

programme in all public buildings.
17
1 Introduction
1.1 Purpose of this Report

This Report has been commissioned by UN-HABITAT to provide an overview of the water supply
situation in Indore. In view of the proposed new water augmentation scheme to supply more water
to Indore through a new $200 million pipeline, it was considered appropriate to undertake an
independent assessment of the water supply to Indore as well as a review of all water demand
management activities being undertaken in the supply area.
This Report is based on a relatively short investigation of the Indore water supply system undertaken
in July 2005 and is therefore limited to a broad status assessment which is supported by general
recommendations. It was never intended to provide detailed recommendations with specific designs
since such work is part of the larger augmentation study and completely outside the scope of work
facilitated by UN-HABITAT.
The Report provides an overview of the current water supply situation in Indore with specific reference
to areas where water is being lost or wasted through leakage or inefficient practices. Having identified
many of the key problems, various suggestions/recommendations are made which in turn form the
basis for a new Water Conservation Strategy.
1.2 Project Area

The city of Indore is situated in the Madhya Pradesh region of India and is known as the industrial
and commercial capital of the region (See Figure 1 for locality map). Some of the key characteristics
of the city can be summarised as:
• Average annual rainfall = 900 mm
• Length of mains = ±1400 km
• Number of connections:
– House : 136 730 – 155 889

– Commercial : 1024 – 1253
– Industrial : 1320 – 1354
– Community Standposts : 7263
– Illegal : between 20 000 and 40 000
• Population = ±1.66 million (2002)
• Service Reservoirs = 34 (Number) with storage capacity 76 Ml
• Area = 214.1 km2
19
Figure 1: Locality Map of Indore, Madhya Pradesh
The bulk water is supplied from four sources and the approximate volumes provided from each
source are shown in Table 2. Based on these volumes, allowing for approximately 30% losses,
the per capita water availability should be between 72 and 84 litres /day. However, Indore currently
experiences severe water shortages with the result that it is not possible to provide continuous
water supply and most areas only receive water for less than 1 hour every 2nd day.
Table 2: Details of water sources available to Indore
Approx. Daily Supply (Ml/day)

Source
Minimum Maximum
Narmada Water Supply Project 140 150
Yashwant Sagar Tank on Gambhir River 18 27
Municipal Tubewells (2,000 approx) 13 18
Bilawali Tank 0 4.5
Water available (ML/day) 171 199.5
Theoretical per capita water availability based 72 litres/day 84 litres/day
on 30% losses (1.66 million people)
20
It should be noted that the above figures are approximate values based on numerous assumptions.
They do, however, highlight the key elements of the water supply situation in Indore and provide a
rough indication of the existing water available to the city. As can be seen from the figures, the most
important source of water is the Narmada Water Supply Project, which involves pumping water
some 70 km from the Narmada river through a head in excess of 550 m to the city. This scheme has
been in operation for many years and a new pipeline is currently being considered which will provide
a further 360 Ml/day. The proposed new scheme will cost approximately $200 million to complete
and will only be commissioned sometime after 2010. Until the new scheme is operational, the city
of Indore will have to survive using the existing sources which will continue to be stretched due to
the rapidly increasing urban population which has been estimated to grow at between 4% and 5%
per annum.
The current mode of operation for the Indore water supply is one of crisis management where the
water supply personnel allocate the available water on a complex system of scheduling which
involves using numerous elevated storage tanks as well as some direct mains supply. In general
68% of the population receives water between 1 and 2 hours every alternate day, while a fleet of
water tankers are used to augment supplies to other areas receiving insufficient supply. Many
residents also use their own private tubewells (boreholes) which provide water at different levels of
reliability and quality.
1.3 Water Demand Mamagement Strategy

It is in the context of severe water shortages and limited resources that UN-HABITAT has embarked
on an investigation to develop a Water Demand Management strategy for the city of Indore that will
hopefully provide useful direction to several other initiatives being facilitated by other organisations
including the World Bank and Asian Development Bank. The strategy proposed in this document
should be considered as a draft strategy which will require the support and “buy-in” of both the
water utility as well as the different funding organisations involved in the upgrading of the Indore
water supply. For this reason, the WDM strategy has been restricted to key focus areas which are
essential to the efficient management of any water supply system.
Where possible, specific actions have been suggested which will help to improve the situation and
must be implemented at some stage if any meaningful progress is to be achieved. It must be noted,
however, that without major augmentation and very significant investment in the water supply
infrastructure, the possibility of providing a 24-hour supply throughout the City of Indore is unlikely
to be achieved in the near future and expectations in this regard should not be raised.
The WDM Strategy suggested for the City of Indore is considered to be both practical and methodical,
concentrating on key essential issues rather than the “nice-to-have’s” which are often included for
areas with full pressure continuous supply.
Due to the fact that the water supply to Indore is unlikely to be augmented before 2010, it is not
practical to suggest certain measures until such time as the new supply is available. For this reason,
the proposed WDM strategy has been split into short term actions and longer term actions.
The short-term actions should be considered as a matter of urgency to be implemented as soon as
possible and certainly within the next 5 years while the long-term actions are of a lower priority
(although still important) and should be implemented over a 10 to 20 year time frame.
Addressing the problems in the Indore water supply system will take many years and is unlikely to
be completed within less than 20 years. The actual progress will depend upon the commitment of
the governing institutions as well as the availability of the funds required to complete the work.
21
1.4. Methodology
The following aspects formed part of the proposed Water Demand Strategy for Indore:
• District Meter Areas (DMAs);
• Bulk Management Meters;
• Bulk Revenue Meters;
• Domestic Consumer Meters;
• Monitoring of Unaccounted-for Water in each Zone;
• Water Audit;
• Pressure Management;
• Mains Replacement Programme;
• Active and Passive Leakage Control;
• Planned Maintenance;
• General Education and Public Involvement;
• Payment for Water and Illegal Use;
• GIS System;
• Capacity Building;
• Pilot Projects;
• Legislation;
• Water Harvesting;
• Sewage Re-use;
• Retrofit Internal Plumbing.
Each of these aspects is discussed in further detail in the remainder of this report. In addition,
useful practical procedures on a range of practical WDM subjects were included in the Appendices
of this Report.
22
2 Water Demand Management Strategy
2.1 District Metered Areas (DMAs)

Discreet management zones (areas) are a pre-requisite for efficient management of any distribution
system. It enables the operational staff to monitor and manage the water usage and losses for each
separate zone. The international norm for the size of zone (according to the code of practise of various
countries) is between 2,000 and 4,000 properties. However, at this stage no minimum or maximum
size of zone will be specified for Indore as this will vary from area to area.
The procedure of implementing District Metered Areas (DMAs) is described below.
Sectorisation: Short Term

• After recommendations were made by WRP (in 2005) regarding sectorising the supply
network in Indore the IMC has started with a process to split Indore in 12 zones (DMAs).
(March 2006). Details of these 12 zones were not available at the time of finalising this report.
• Once the new Narmada Pipeline has been constructed it recommended to identify one or
two smaller pilot DMAs (between 2,000 and 5,000 connections) where the supply could
possibly be sustained for longer periods (i.e. over 12 hr /day). These pilot DMAs could then
be used to test several of the WDM recommendations on a smaller scale before applying it
to the whole city area. (Discussed in further detail in Section 2.15). Areas with higher than
average water loss should also be identified and sectorised as a matter of priority.
• Perform zone discreteness tests through site inspections and logging. Sectorisation plays a
key role of water demand management and it is imperative that the operation staff
understand the system boundaries and operation. A discreet zone can be described as a
zone where all zone cross connections are closed or metered.
• Identify, service and mark all zone valves for all zones. Zone valves are defined as closed
valves on cross boundary connections. If zone valves do not seal properly, they should be
replaced. All zone valves should be checked on a monthly basis to ensure zone discreteness
and only authorised senior operation staff should be allowed to operate zone valves.
• The exact position of all zone valves and other boundary valves should be captured on a
GIS system for reference.
Sectorisation: Long Term
• Ideally in the long term, the whole of Indore should be sectorised into DMAs of between
2,000 and 5,000 properties. The practicality of this should be investigated for each area
separately and should be checked with Engineers of IMC.
23
2.2 Bulk Management Meters
Proper bulk metering is essential for efficient management and water balance calculations in a water
distribution system. In Indore there are currently no bulk management meters. Recommendations
for a procedure to address bulk metering in the short and long term are described in this section.
Information on the characteristics of mechanical, electromagnetic and ultrasonic meters are provided
further on in this section while some detailed guidelines for design of the pipework and chambers
for mechanical meters are provided in Appendix C for reference purposes. It should be noted that
the team responsible for the installation of any meters should develop its own standards in line with
the current Indian legislation in this regard. The details have been provided to assist with the
development of such standards.
Bulk Management Meters: Short Term

• Bulk meters should be installed on inlets and outlets of all water purification works. (Details
below). The losses at purification works usually represent a significant portion of the overall
water losses and, therefore, it is important to measure both the inlets and outlets. Due to the
relatively large pipes involved and because it will cause problems if the supply is interrupted
for any time, it is likely that ultrasonic meters will be the most practical solution. These meters
can be installed permanently on the outside of the pipe without having to shut down the
pipeline. (See Appendix A for schematic drawing on meter location).
• Meters should be installed at selected positions on the trunk mains as shown on

Appendix A (Details Below). The suggested location of these bulk meters are shown but
must be confirmed by the Engineers of the IMC. For large pipes it is also likely that ultrasonic
meters will be the most practical solution.
• It was mentioned previously that the IMC is currently sectorising Indore in 12 management
zones. It is also recommended to meter the inlet to each of these zones. These meters should
preferably be placed upstream of the zonal valves that are closed to distribute the water – to
ensure that the meter will always be filled with water.
• A bulk meter reading programme should be implemented to record and evaluate bulk meter
readings and to undertake a water balance per zone on a monthly basis. Any anomalies in
meter readings or in the water balance should be investigated and remedial action implement
if required.
• A bulk meter repair programme should be implemented whereby broken meters can be
repaired within seven days. For most mechanical meters this is a fairly simple exercise since
the internal mechanism can usually be replaced without replacing the meter body. For
magnetic and ultrasonic meters the process is normally more complicated as the electronics
of the meters must be checked and repaired if necessary – a process that can often take
many weeks if not months.
The details of the meter installations are described further in detail below.
Meters at Water Purification Plants

The inlets and outlets of the water purification works should be metered as summarised in Table 3.
24
Table 3: Suggested meters on inlets and outlets of water purification plants
No. Purification Works Installed Production Pipe Size Pipe Size Meters
Capacity Inlet Outlet Required
Ml/d Ml/d mm mm
1 Narmada 185 172 to 185 1200 and 600 1200 3
2 Deodharan 40 18 to 27 700 2 X 650 3

(Yashwant Sagar)
3 Bilawali Tank 9 0 to 4.5 Unknown Unknown 1
Total 7
Note: 1) The Narmada and Deodharan purification works require meters on the inlets and outlets
of the purification works.
2) The volume of water supplied from the Bilawali Tank is low and according to the IUDMP
reports the pressure filter units are not operational and, therefore, it is recommended to
install only one meter on the outlet of Bilawali Tank.
3) The capacity of purification works were obtained from the IUDMP Report for Indore.
The pipe diameters were obtained from a presentation by IMC. All information must be
verified on site.
Bulk Management Meters: Short Term

The bulk supply of water in Indore should be metered as shown in Appendix A. The suggested
location of these bulk meters are shown but should be confirmed by the Engineers of the IMC.
Table 4: Proposed bulk management meters
No. Trunk Main Description Pipe Size Meters

mm Required
1 Trunk Main #2 Trunk Main from Jalud 1200 3
2 Dewas Line Trunk Main to Dewas Town 520 1
3 Trunk Main # 3 Trunk Main #3 to Hawa Bunglow Tank 620 1
4 Trunk Main #1 Trunk Main #1 to Annapurna Tank 900 1
5 Trunk Main #1 Trunk Main #1 to RAJ Mohalla Tank 750 1
6 Inlet to zones Inlet to 12 zones. Various sizes Guess 12

(According to IMC 12 zones are
currently implemented – March 06)
7 Main Sumpwells Sumpwells with supply greater Various sizes Guess 4

than 1 Ml/day.
Total 23
Note: The pipe diameters were obtained from a presentation by IMC and should be verified on site.
25
Bulk Meters: Long term
• It is recommended that bulk meters be installed on the outlets of all elevated water tanks as well
as at the entrance to all zone-metered areas – the details of which must first be clarified with IMC
Engineers. (The IUDMP technical report for Indore indicates that 71 bulk meters will be required
on feeder mains). The number of zone metered areas that can be established will be dictated by
the availability of funding. It will not be possible to complete this task over the short-term and is
likely to take place over a 10-year period.
• It should be taken into account that water meters will not be accurate if water supply is not
sustained (i.e. air in pipelines). The metering should, therefore, be prioritised to meter the positions
with constant supply.
Additional Meter Information

The characteristics of different type meters are shown in Table 5 and the schematic layouts of
suggested meter installations are shown in Figure 2. Cost calculations for meters in South Africa
indicate that mechanical meters are more cost effective up to meter diameters of 300 mm. From
350 mm diameter and over, magnetic or ultrasonic meters should be considered as they are often
Figure 2: Schematic layouts of typical meter installations
26
more cost effective for the larger sizes. The local consultant should verify which meters are the most
cost effective and reliable in India as this may be different from South Africa. The issue of power
supply as well as back-up support must be considered when selecting the most appropriate
meter. A copy of a typical spreadsheet used to assess the most cost effective meter is shown in
Appendix E. A typical design drawing for a mechanical meter installation is shown in Appendix G.
Table 5: Meter Characteristics
27
2.3 Bulk Revenue Meters
A list of 59 bulk consumers was obtained from IMC. These consumers pay monthly water charges
based on their meter readings. The details of the top 10 (of the 59) consumers are summarised in
Table 6. The top 10 consumers represent approximately 94% of the total volume billed for metered
bulk consumers. Examination of several of the bulk meters suggests that there is no consistency
between the type or make of the meter and it seems that a different system has been used for each
consumer. (see Figure 3 and 4) It is very difficult to establish the accuracy of the metered readings
although it is claimed that many of the different types of meters are checked regularly. It appears
that there is no system for meter replacement and in many cases the meters have never been checked
or replaced since they were installed – some are in excess of 10 years old.
Table 6: List of top 10 bulk water consumers in Indore
No Name of consumer Size of Average Tariff Year of

connection monthly connection
supply
Rupee
inch kl/month per kl
1 M.E.S Mhow 20 318500 10 1978

2 Mhow Cant Board 12 75116 10 1979
3 Sarpanch, Gram Panchayat, Kodaria 3 29180 10 1992
4 CAT, Indore 8 21850 10 1990
5 Western Railway, Mhow 8 18324 10 1978
6 Adresh Guru Nanak Griha Nirman 6 15900 10 2001
Sanstha, Niranjanpur, Indore
7 C.M.O. Rao 4 8950 10 1979
8 Rajiv Aawas Vihar Yojna No.114 IDA,
Indore 16 7500 10 2002
9 M.Y. Hospital, Indore 6 5125 10 1995
10 Maa Vihar Colony, Indore 2 4860 10 2001
Total 505305
Figure 3: Typical Bulk Consumer Meters in Indore
28
Figure 4: Typical Bulk Consumer Meters in Indore
Recommendations for a procedure to address bulk revenue meters in the short and long term are
described in this section.
Bulk Revenue Meters: Short Term
• It is recommended that the meters for the top 10 consumers (that are currently metered) are
replaced as soon as possible with reliable meters capable of being logged using standard
logging equipment. For the military base at Mhow it might even be worthwhile installing
two meters in series to ensure accurate meter readings.
• As a next step, the top 50 consumers in Indore should be metered and billed accordingly –
based on the meter readings. (Consumers that was previously un-metered). This should also
include metering some of the larger government buildings to show that IMC is also
monitoring the water supply to their own buildings.
• A bulk meter should be installed at the point where the water tankers are filled each day.
(see Figure 5) There is currently no meter at this point and the current assumption of
7 Ml/day can then be confirmed or revised as appropriate.
• The water utility should preferably standardise on one (or maximum of two) makes of meters
e.g. Elster Kent , Sensus, Panametrics etc. It is important that the meters are sized properly
for the customer and that they are installed properly by following the recommended
installation procedures regarding length of straight pipe, strainers, isolating valves etc.
(Appendix G for typical mechanical meter design drawing)
• All new meters should be maintained properly and the supplier should be selected to ensure
that spare parts are readily available and the quality of the meters is high. It should be
remembered that the cost of the meter is often only a small component of the overall cost of
a meter installation and it is not always appropriate to select the cheapest. Consumer meters
can be compared with cash registers and it is imperative that these meters are well maintained
and checked for accuracy.
29
Figure 5: Water Tanker Filling Point in Indore
Bulk Revenue Meters: Long Term
• It is recommended that all bulk revenue meters are replaced and a proper billing system is
established to streamline the billing system.
• Standards for meter installations and calibration procedures should be developed by/for
the water utility to ensure that all revenue meter installations are of a certain quality.
2.4 Domestic Consumer Meters

There are no domestic consumer meters in the Indore water supply system. All accounts sent to
individual domestic consumers are therefore based on a flat rate tariff. This form of billing often
results in very high wastage and/or leakage at the consumer level since there is no financial incentive
to save water. Flat rate tariffs should therefore be discouraged if possible and replaced eventually by
a step-tariff which is based on genuine metered consumption. It appears, however, that domestic
metering has been implemented in several parts of India with varying degrees of success. While
such metering would normally be the ideal solution to customer leakage control it may be premature
to propose full domestic metering in the city of Indore due to the expense involved with installing,
servicing and reading the meters. A more cautious approach has therefore been proposed after
which a decision regarding full domestic metering can be taken.
Figure 6: Typical Domestic Consumer Meter Installations in South Africa
30
Domestic Meters: Short Term
• It is recommended two or three pilot areas are identified where domestic meters can be
installed. Areas with approximately 50 to 100 properties would be ideal for this exercise
since the cost of the meters and installation will be relatively small. Such metering will
enable the water utility to evaluate the value of domestic metering at a small scale before
committing to full scale domestic metering which may or may not be successful in Indore.
Due to the warm climate in Indore it may be considered to install above ground meters
in Indore which is cheaper than the conventional method of putting a meter below ground
in a meter box. (See Figure 6 for typical examples). In colder climates the consumer meters
burst if the temperature falls below zero and, therefore, the meter box is required to shield
the meter from the elements.
• The water utility may also wish to trial different makes of domestic meters to assess their
reliability and suitability for use in Indore. There are many makes of domestic meter and
it is important to ensure that the meters used in any large scale project are reliable and
suitable for the area. (A list of various meter suppliers in India was provided in the IUDMP
Technical Report Volume 6).
• Pre-paid metering should also be considered as one of the options for a pilot project.
With pre-paid metering consumers can only use the volume of water they have paid for
in advance. Normally this type of metering serves as an incentive for consumers to use
less water. Examples of typical pre-paid meters are shown in Figure 7.
• The domestic metering “Pilot Projects” will have a 2nd use in that they will help to establish
the daily or monthly water use per connection or per capita – one of the key uncertainties
in the current estimation of water demands in the system. It is only through such case
studies that the water utility can establish realistic estimates of current and future water
demands which in turn influence the overall water balance of the system.
It should be noted that with any type of domestic metering it is crucial to get the acceptance
of the consumers before installation of the actual meters.
Domestic Meters: Long Term
• No recommendations on the long-term implementation of domestic meters can be made

at this stage. Ideally it is normally recommended that every connection be metered including
all fire-fighting and municipal connections etc. In the case of Indore, however, it has yet to
be shown that full scale connection metering is feasible and the results from the pilot studies
should be assessed before approving such large investment.
It should be noted that some detailed information on a procedure which can be used to check
the accuracy of domestic meters is included in Appendix F for reference purposes.
31
Figure 7: Typical Pre-paid Domestic Meters
2.5. Monitoring of Unaccounted-for water in each zone

Monitoring of unaccounted-for water can be achieved at two different levels namely through the
logging of minimum night-flows and the analysis of the various management meter readings. In
Indore the scope for this monitoring will be limited to the number of bulk meters installed. Electronic
copies of software programmes (including the manuals) to undertake the calculations will be
provided as part of this report to the IMC.
Recommendation: Short Term
• Once the first phase of bulk meters are installed the process of monitoring should
commence. The bulk meters should be logged and analysed where possible. Unfortunately
the minimum night flows can only be determined once meters are installed on the outlets
of the Water Towers. Additional information on the analysis of logging results can be found
in the SANFLOW manual [Reference].
Recommendation: Long Term
• It is recommended that the level of leakage in all discrete zones be analysed annually using
standard techniques (e.g. analyses of minimum night flows etc) as and when such zones
are established and the appropriate bulk management meters installed (Figure 8). This
should become a standard technique employed by the utility to control leakage.
The term Unaccounted-for-water (UFW) should be replaced with the internationally accepted
term Non-revenue Water (NRW) since this latter term is less ambiguous and cannot be easily
manipulated.
32
(a) (b)
Figure 8: (a) Logging of bulk Meters; (b) Analysis of logging results
2.6 Water Audit

A preliminary International Water Association (IWA) water balance/audit was undertaken for Indore
using the AQUALIBRE software supplied with this report (See Water Audit Report for Indore or
Appendix H). The calculated Infrastructure Leakage Index (ILI) for Indore is approximately 400 which
indicate severe leakage problems. The ILI value is used to benchmark leakage in different countries.
A low ILI indicates low leakage and a high ILI indicate high leakage. Current findings in other countries
indicates the following average ILI values (South Africa = 6, USA = 6, UK = 3, Australia = 2).
• The data used to calculate the ILI should be verified and updated where necessary by the
Engineers of IMC. The calculated ILI for Indore was 400 which is one of highest in the world.
It might be that with more accurate data the ILI would come down to a more realistic value.
• It should be noted that the ILI calculation is very sensitive to the time the system is
pressurised. If the time pressurised is 1hr /day the ILI is approximately 400, but if the ILI is
6 hr/day the ILI is approximately 80. The time the system is pressurised should be investigated
in more detail through the pressure loggings throughout the system. It might be that low
laying areas receive water for much longer periods than 1 hour per day.
• A paper on the accuracy limitations of the Infrastructure Leakage Index (ILI) with specific
relation to developing countries is provided in Appendix I.
• It is recommended that the water balance/audit be continuously updated to incorporate

the latest and most accurate data. Two electronic copies of the Aqualibre software used for
the water audit have been provided by WRP to IMC for this purpose. (March 2006).
2.7 Pressure Management

Pressure management can be used to control customer demand and reduce leakage in water supply
systems. Under certain circumstances it is the most cost-effective form of leakage control that can
be implemented. In the case of the Indore water supply system, however, it is not considered
appropriate at this time since few if any parts of the system receive continuous pressure (let alone
high pressure), and the scope for pressure management is therefore very limited.
33
• It is recommended that the water pressure be monitored (logging of pressures) at selected

points in the distribution system to establish the daily pressure profiles experienced in the
system. It may be possible to consider some form of pressure management at certain
points in the system but this cannot be established until some accurate pressure information
has been collected. A simple method to test water pressures is included in Appendix F.
• Once pressure information is available it might be considered to reduce pressures in selected

positions only during night time. Additional information on pressure management can be
found in the PRESMAC manual [Reference].
No long term recommendations can be made with regard to pressure management at this
time.
2.8 Mains replacement programme

Mains replacement is often the most expensive measure that can be undertaken to reduce leakage
and is usually only undertaken as a last resort. It is therefore important that any mains replacement
is properly co-ordinated and motivated to avoid wasting the limited funds available to improve the
system. Mains replacement is normally based on the frequency of bursts occurring from a specific
length of pipe and it is, therefore, important to record the frequency of bursts for each main section
of pipe in the system. It should be noted that most water supply systems are designed to last up to
50 years which in turn suggests an annual replacement of 2% of the total asset value. Very few water
utilities worldwide allocate 2% per year to the maintenance with the result that many systems,
including the Indore system are gradually deteriorating.
• It is recommended that a single policy regarding mains replacement be developed for the
City of Indore in which a target percentage of mains replacement per year should be
provided. This would involve using GIS coverage for the full Indore area and highlighting
all pipes of different ages, materials and conditions. The most critical sections of pipe could
then be identified and prioritised for replacement. The number of bursts per pipe section
can also be indicated on the GIS system.
• It is recommended that the value of the water supply system is assessed and that 2% per
annum is allocated to maintenance and repair from which the mains replacement
programme can be funded.
2.9 Active and passive leakage control

Passive leakage as the name suggests is a passive or reactive approach to leakage control whereby
a water utility will send out a leak repair team only when a leak is reported to the utility by a member
of the public. Active leakage control is a pro-active approach whereby water utility personnel,
armed with leak detection equipment, actively search for unreported leaks in the water distribution
system (Figure 9).
34
There is an existing communication system called the “Indraroot” cell that was established by the
IMC to monitor and coordinate all water related matters including leak reporting. This forms part of
Passive leakage control. Passive leakage control will always be required whether or not active leakage
control is undertaken and requires an efficient telephone answering system supported by quick and
efficient repair teams.
Active leakage control involves manually checking the water supply system in order to identify any
unreported leaks. In the case of Indore, it is understood that only recently (2005/2006) the IMC has
started with some form of active leakage control – where a number of visible leaks in the distribution
system has been identified and fixed.
Figure 9: Active Leakage Control in other areas in India
• After the initial visit of WRP to Indore (2005) the IMC has started with a process to identify
and fix visual leaks in the distribution system. It is recommended that IMC take this initiative
further and that full time leak detection teams be established.
• It is recommended that personnel be trained in the art of leak detection and repair.
• It is recommended that the whole distribution system is surveyed using normal
simple sounding techniques. This exercise can be coupled to the valve audit (as proposed
in Section 2.10) since both activities can be undertaken simultaneously. It should be noted
that active leakage control can only be undertaken during periods of pressurised supply.
• The visible leaks on the Narmada pipeline should be repaired (Figure 10). Guidelines to
repair leaking pipelines under pressure are provided in Appendix B. These guidelines should
be evaluated and used on the discretion of the engineers of IMC. The engineers of IMC have
struggled in the past to repair these leaks because the supply of water cannot be interrupted.
• It is recommended that the systems used for passive leakage control be improved and linked
to a GIS including a database suitable for recording details of all reported leaks etc. In addition,
a full-time active leakage control team (or teams) should be established to carry out sounding
at regular intervals (annually if possible).
• The effectiveness of the “Indraroot” cell as part of passive leakage control should be
evaluated.
35
Figure 10: Visible leaks on 1200 mm Trunk Main from Narmada
2.10 Planned Maintenance

It appears that relatively little planned maintenance takes place in the City of Indore and as a result
many of the valves are in poor condition. All valves have a limited life and without regular maintenance
they will deteriorate quickly causing leakage and water loss.
In the City of Indore, at least 50% of the valves inspected were leaking to some degree. It was indicated
by water utility personnel that many of the valves used on a daily basis to control the flow of water
into the various areas do not provide a proper seal. This can result in greater wastage and is generally
a major problem in cases where butterfly valves are being used on a daily basis to control the flow of
water from one area into another. Butterfly valves are renowned for not sealing if opened and closed
frequently since they are not designed for daily use.
• It is recommended a valve audit be undertaken for all valves in the system. They should be
inspected carefully, numbered and described properly – i.e. type of valve, size, approximate
age, and condition. Any leaking valves should be rated according to the level of leakage so
that repairs can be properly prioritised to ensure that the major leaks are repaired first after
which the smaller leaks can be repaired. (Figure 11).
• The Yeshwant Sagar pumpstation appears to require repair work to some of the electrical
systems although this will require further investigation by a specialist mechanical engineer.
(Figure 12).
• All butterfly valves being used on a daily basis to control the flow of water from one area to
another should be checked to ensure that they are water-tight and replaced if necessary
with high quality gate valves which are more appropriate for such applications.
• It is recommended that all components of the water distribution system are examined and
a long term asset management plan is developed in which the planned maintenance of the
water supply system will be an integral component.
36
Figure 11: Typical Leaking Valves throughout Indore
Figure 12: Photos of the electrical system from Yeshwant Sagar Pumpstation
2.11 General education and public involvement

Education and the involvement of the general consumer is an important aspect of any WDM strategy.
Water is already being supplied on an intermittent basis and the situation can only deteriorate further
over the next 5 years as the population of Indore increases at the projected 4% to 5% annually. The
augmentation scheme is unlikely to be commissioned before 2010 and it is therefore essential that
actions are taken to help manage the current resources properly. In this regard it is important that
the consumers are informed how they can save water in the home and they should be encouraged
to inform the water utility whenever they see leakage or wastage.
37
It was previously mentioned that the IMC has established an “Indraroot cell” (Figure 13) which helps
to create public awareness through various initiatives including exhibitions, documentaries and
pamphlets which are distributed throughout the city.
Figure 13: “Indraroot” communication cell in Indore
• The effectiveness of the “Indraroot” cell as a public awareness instrument should be

investigated. The aim should be to improve the programme continuously.
• All consumers should know the phone number to report leaks. This can be achieved through
a variety of measures such as providing calendars to all registered consumers with the
necessary contact numbers.
• A schools water saving campaign should be implemented whereby all scholars are informed
of the water situation in Indore and how the available water in the home and school can
be used efficiently.
• The possibility of incorporating water conservation in the school curricula should be

considered – the Queensland model (Australia) is possibly the best case study in this regard
and can be duplicated in Indore if given political and local government support.
2.12 Payment for water and illegal use

It is estimated by the water utility personnel that there are approximately 20,000 to 40,000 illegal
connections in the Indore area of supply although this estimate is not based on any proper
investigation. Others suggest that the figure may be much higher and in reality nobody knows the
true extent of the problem. It is often not politically acceptable to simply remove illegal connections
and in most cities the approach of legalising such connections is preferable. It should be noted that
illegal connections are often made with sub-standard fittings with the result that they leak badly
and more water is often lost through the leakage than is used by the resident using the illegal
38
connection. When legalising such connections it is therefore important to make a proper connection
using proper fittings and in this manner, the consumer is added to the billing data base and the
leaking connection is replaced with a proper connection. Political support is required to address
illegal connections and the water utility must develop a proper strategy to this issue which is fully
sanctioned by the politicians. Without such support the process of removing illegal connections
may flounder.
• It is recommended that the water utility develop a sound policy for addressing the issue of
illegal connections which is fully supported by top management and politicians.
• The utility should undertake a full scale exercise to identify and remove all illegal
connections – replacing them with legal connections if appropriate.
• Legislation and appropriate bye-laws should be in place to facilitate the process.
• All illegal connections should be eliminated from the system.
2.13 GIS system

The consultant TERI has developed a draft GIS system for Indore (as used in the 2-day WDM workshop
in Indore). The information used should be verified and should only be used a starting point to build
a comprehensive GIS system for the city.The type of information that can be added to the GIS includes:
• Cadastral information (properties and numbers, suburbs and names, roads and names, land use);
• Contours;
• Customer information (Name, address, historical consumption data);
• Pipeline information (pipes, control valves, zone valves, storage structures).
Once the basic GIS system is in place, it can be upgraded to incorporate valve and meter management
programmes, maintenance programmes, other services such as electricity, sewer, stormwater,
communications, etc.
• The consultant TERI has developed a draft GIS system for Indore (as used in the 2 day WDM
workshop in Indore) based on the available CAD information. It is recommended that IMC
should use this draft system as a starting point and it should be continually updated,
corrected and improved;
• Prepare plan books for operations staff.
• Collect plan books on an annual basis and make necessary changes on the electronic system;
and
• Obtain regular updates of cadastral information and make necessary changes to GIS system.
39
2.14 Capacity Building
There is a general lack of capacity within the water utility with regard to WDM and water use efficiency.
In addition there is little capacity with regard to metering, maintenance, GIS and various other issues
required to run a water utility efficiently. For this reason it is necessary to provide support and training
in various key areas. Such training should be properly managed and co-ordinated to gain maximum
benefit and sufficient funds should be available to enable the water utility to undertake their core
business in a proper manner.
• A 2-day training programme on WDM has been presented by WRP and TERI to delegates of
IMC and Bhopal, Jabalapur, Gwalior in March 2006. (see Figure 14).
• A WDM unit should be established within the water utility and further detailed training
provided to the personnel.
• A leakage detection team should be trained in the art of leak detection and repair of leaks.
• A meter management team should be established and trained in the use, installation and
repair of water meters. (see Figure 14 for training on meter repair).
• A GIS team should be established to manage the GIS system for the entire water supply
network. Appropriate training on GIS may be required.
• Training on the operation and maintenance of purification and sewage treatment facilities
should be provided where necessary.
• All training requirements should be identified and co-ordinated by water utility staff.
Figure 14: WDM Training Programmes for Municipal Corporation personnel
2.15 Pilot Projects

Before embarking on any large scale projects to improve a water reticulation network it is often
appropriate to undertake a small scale project or Pilot Project to assess whether or not the proposed
procedures are viable. Pilot projects are extremely useful and can often provide information that
may save a water utility investing heavily in something that will not function properly in a specific
environment. Pilot projects can be used to improve virtually any aspect of a water utility’s business
40
ranging from metering to leak location to tariff structures. While some recommendations are made
with regard to possible pilot projects, the list is far from complete and the water utility management
should add to the list or delete items as appropriate.
• It is recommended that several pilot projects are undertaken to test the use of domestic
meters. Ideally each pilot project should use at least 100 (Number) meters and several such
projects can be undertaken to assess the reliability of different meters as well as to assess
the per capita use for different levels of service.
• A pilot project should be undertaken to assess the potential for providing 24-hour supply.
Once again a small area should be identified which is discrete and supplied from a single
supply pipe – which in turn should also be metered. The area should be supplied with
water continuously until such time as the water being supplied into the area stabilises.
The minimum night flow can then be determined and the level of leakage and/or wastage
can be assessed. This information is very important when considering the possibility of
providing continuous supply. This area can then be used to test various other WDM measures
such as leakage detection and even pressure management if the pressures are sufficient.

• All pilot projects whether successful or failures should be properly documented for future
reference. In the case of successful projects where savings were achieved, they should be
revisited after 3 years to determine if the initial savings achieved were sustainable or
temporary.
2.16 Legislation
Legislation is required to support the process of WDM and encourage the use of water use efficiency
in the City of Indore. Such legislation can be in the form of regional laws or local bye-laws. Such
legislation also requires full support from the municipal managers as well as all politicians if it is to
be implemented successfully. There should be both incentives for adopting water efficient practices
as well as penalties for wasting water. The water supply situation in Indore is very poor and the
situation will almost certainly worsen if appropriate and decisive action is not taken immediately.
Proper legislation is therefore important to facilitate water use efficiency in the City of Indore.
It should be noted that the assessment undertaken through the UN-HABITAT was relatively short
and there was little opportunity to collect or study the local Bye-laws and national legislation
covering water use efficiency. The recommendations made in this regard are therefore relatively
coarse and should be considered in this light.

• Local bye-laws are required to encourage water use efficiency in the home and at commercial
properties within Indore. Penalties should be imposed for deliberate water wastage.
• The bye-laws must be enforced with vigour. (In South Africa the Department of Water and
Forestry has recently established an investigative unit with the specific aim to investigate
water misuse.)

• Provincial or national legislation is required to back-up the local legislation and must be
promoted at a national level.
41
2.17 Water Harvesting
Considerable effort has been spent promoting and implementing the harvesting of rainwater from
roof tops in order to recharge the groundwater throughout Indore. The success of the efforts is
commendable and while the results are difficult to quantify, the publicity accompanying the efforts
has created a greater awareness for water conservation throughout the Indore supply area. See
Figure 15 for photos of the rain water harvesting programme.
Figure 15: Rain Water Harvesting Project in Indore
• It is recommended that the effort on water harvesting is maintained and that the campaign
be widened to cover other aspects of water saving within the home since many structures
are already in place to facilitate such efforts.
• The implementation of rain water harvesting tanks for general consumers should be
investigated. A commendable project has been undertaken in Sri-Lanka where the local
communities were trained to build their own concrete rainwater harvesting tanks.
The quality of the rainwater should also be much better than the current quality of the
piped water if the storage period is not excessive.
2.18 Sewage Reuse

It is estimated that it cost between 7 and 15 Rupees / kl to supply treated water to Indore and that
the cost of treating the sewage to a level suitable for discharge into the local stream is approximately
1 Rupee per kl of water. Furthermore it is estimated that the annual sewage treated in Indore will
increase to more than 90 Ml/day soon after the new transfer scheme is commissioned. Clearly the
volume of sewage is likely to increase significantly and the possibility of increasing the capacity of
the sewage treatment works is a distinct possibility.
42
The scope for re-use of treated sewage is becoming a key issue in most large cities in the world and
Indore will be no exception. The scope for using treated sewage for either industrial or agricultural
purposes is enormous and should not be overlooked. To date it appears that little, if any, attention
has been given to this issue.
• It is recommended that a scoping exercise be undertaken to assess the possibilities for

sewage re-use in Indore. This study should investigate the scope for both industrial use as
well as agricultural use. With regard to agriculture, it appears that various crops can be
considered including cotton and sugar cane amongst others. On the industrial side, many
industries might use treated sewage which can be very cost effective compared with water
being pumped from the Narmada River.
• The possibility of groundwater contamination, especially in areas where tube wells are used,
should be taken into account when assessing sewage re-use.
• A sewage reuse project should be implemented
2.19 Retrofit Internal Plumbing

Retrofitting is the repair and or replacement of various household fittings that can attribute to high
water loss or usage. General retrofitting of leaking plumbing fittings are usually more successful in
public buildings and schools than in private homes. In this regard the main focus of this task should
be addressed at reducing the consumption and losses at public buildings. More information on
different types of retrofitting and retrofitting pilot projects can be obtained in the publication by
UN-HABITAT: Leakage Reduction Projects undertaken by Rand Water [Reference].
• Undertake visual leak surveys in all municipal buildings, schools, police stations etc.
• Repair all leaks identified in these buildings and remove wasteful devices (e.g. Tip Tray
Urinals).
• Implement a continuous leak survey and fixing programme in all public buildings.
• Investigate the potential for household retrofitting projects as a pilot project.
43
References
Integrated Urban Development in Madhya Pradesh (IUDMP), Volume 6 Technical Report, December 2002, ADB
TA No 3759-IND.
Integrated Urban Development in Madhya Pradesh (IUDMP), Volume 2 City Report Indore, December 2002,
ADB TA No 3759-IND.
PowerPoint Presentation on the Narmada Water Supply System in Indore, for Public Health and Engineering
Department, Indore Municipal Corporation.
Report on Narmada Water Supply System, Indore Municipal Corporation.
PowerPoint Presentation on Un-Accounted-for Water, M.N. Thippeswamy.
List of billed water consumers, Indore Municipal Corporation, July 2005.
PowerPoint Presentation on Urban Water Supply and Environmental Improvement Project Indore,
Asian Development Bank.
Sanflow User Guide Version 1.5, South African Water Research Commission, Report No TT 109/99, ISBN 1 86845
490 8, June 1999.
Presmac User Guide Version 1.1, South African Water Research Commission, Report No TT 152/01, March 2001.
Leakage Reduction Projects Undertaken by Rand Water, UN-HABITAT, ISBN 0-620-29503-1, August 2002.
Water Demand Management Cookbook, UN-HABITAT, ISBN 0-620-30734-X, November 2003.
Water Conservation and Demand Management Strategy for Johannesburg Water, UN-HABITAT, May 2001.
44
Appendix A
Schematic Layout of Bulk Water Supply, Indore
Source: Base Drawing supplied by IMC
45
Appendix B
Repair Leaking Pipelines without Disturbing the Pipeline
There are a large number of the expansion joints that are leaking on the main pipeline from the
Narmada River to Indore and significant quantities of water are being lost which could otherwise be
used to provide a better supply to Indore. (See Figure B-1 for typical leaking joints). The pipeline is
a critical element in the water supply to Indore and cannot be taken out of service while repairs
are made.
Figure B-1: One of the leaking joints on the Narmada Pipeline
It should be noted that the type of expansion joint used on the Narmada pipeline as shown in
Figure B-2 can sometimes be serviced by tightening the flange bolts which in turn will compress
the packing into the joint and this reduce any leakage. Obviously this will be the cheapest and quickest
option to repair the leaking joints. It is not known if this has already been attempted by the water
utility and this should be checked before proceeding with the other suggested processes.
Elevation: not to scale
Figure B-2: Expansion Joint Detail
46
1. Repair by injecting epoxy sealant
Various options of repairing the pipeline have been examined and after considerable discussion it
was agreed that one specific repair method offers the most appropriate solution. The proposed
method involves injecting an epoxy sealant into the fortex packing (See Figure B-2) around the
leak while the system remains pressurised as can be seen in Figure B-3.
The following pictures were taken from the web site www.coltonline.com.
Figure B-3: Repair of leaking expansion joint (Source: Coltonline website)
The leaking pipe joints on the Narmada Pipeline (Figure B-2) are virtually identical to those depicted
on the Coltonline website and it appears that this method would be ideally suited to repair the leaks
on the Narmada pipeline. Care must, however, be taken to ensure that the drilling and injection is
undertaken at the correct position on the joint to avoid aggravating the problem.
2. Repair with a custom made shell

While the drilling and injection option is considered to be the most appropriate approach to repairing
the Narmada Pipeline, an alternative approach involves the use of a watertight sleeve which is placed
over the whole expansion joint. The leaking joint is basically encapsulated with a custom-made
steel shell that is sealed on to the pipeline with a compression type joint. The system is described as
follows:
• The shell is delivered on site in two halves;
• The two halves are fitted together over the leaking joint and can be fitted together through
welding or any other suitable method. The valve at the bottom of the shell should be kept open
so that the water can drain out during assembly to avoid pressure building up within the joint
during construction.
• The complete shell is then sealed onto the pipeline with a custom made joint which should
incorporate a flexible coupling to allow some movement through expansion and contraction of
the pipeline.
• The valve at the bottom of the shell is closed at the end of construction making the leak watertight.
47
Figure B-3: Custom Sleeve that can be fitted over leaking joint
Although this method will work to repair the leaks on the Narmada Pipeline it will require skilled
boilermakers to make the shell and compression type joints, as it is unlikely that such joints can be
obtained “off the shelf”.
48
Appendix C
Sizing and Design of New Meter Installation
1. Sizing of Meters
Information on different types of meters (i.e. mechanical, electromagnetic and ultrasonic) was provided
in Section 2.2 of the main report. Once a decision is taken on the type of meter to be used, the meter
must be properly sized. The sizing of water meters can be undertaken using software or sizing sheets
supplied by most meter suppliers. The input parameters for sizing include maximum and minimum
flow rates, which can be obtained through the use of a temporary clamp-on ultrasonic meter that is
installed on the outside of the pipe as shown in Figure C-1. After the initial logging the temporary
meter is removed and the sizing is undertaken for the permanent meter installation.
Figure C-1: Initial logging of flows with temporary clamp-on ultrasonic meters
on large and small diameter pipes
The typical sizing table for SENSUS WPD mechanical meters (one of the large meter companies –
formerly Meinecke from Germany) are provided in Table C-1 to provide an indication of the flow
ranges per meter size. The flow values indicated can be summarised as follows:
• Qmax: Maximum Peak Flow Short Time. This is the absolute maximum flow that should be
allowed through the meter. Qmax for a once in life time over 24 hours or Qmax X 1.2 for once in a
life time over 5 minutes.
• Qn: Continuous Flow. Qn is the maximum flow rate at which the meter can run for an unlimited
time. The meter should ideally be sized that the actual maximum flows be lower than Qn. The
meter accuracy will be (± 2%).
• Qt: Transitional Flow. The meter should be sized that actual minimum flows are higher than Qt.
The meter accuracy will be (± 2%). The meter should be sized to operate between Qn and Qt.
• Qmin: Minimum Flow. This is the absolute minimum flow that should be allowed through the
meter. The meter accuracy will be (± 5%).
49
Table C-1: Sizing Table for SENSUS WPD mechanical meters
Meter Qmax Qn Qt Qmin

(mm) m3/hr m3/hr m3/hr m3/hr
40 60 40 0.8 0.3
50 90 50 0.7 0.3
80 200 120 0.8 0.5
100 300 230 1.8 0.8
125 350 250 2 1
150 600 450 4 1.8
200 1200 800 6 4
250 1600 1250 11 6
300 2000 1400 15 12
It should be noted that meters are usually designed to measure accurately at flow velocities that are
higher than in normal pipelines. For this reason it is usually necessary to reduce the pipe diameter
before the meter to ensure higher flow velocities through the meter. For example on a 200 mm
diameter pipeline it would typically require a 150 mm meter and not a 200 mm meter as often used
by many water utilities.
2. Design of mechanical meter installation

Once the meter make and size has been established, the meter installation can be designed.
The following issues should be considered when designing the pipework for a mechanical meter
installation:
• Most meters require a straight length of pipe before and after the meter to ensure accuracy of
flow measurement. These requirements should be obtained from the meter manufacturer and
vary from one meter to another.
• A strainer should be installed upstream of the mechanical meter to trap any debris in the line and
thereby protect the meter mechanism which is easily damaged.
• Isolating valves should be installed upstream and downstream of the meter to facilitate regular
maintenance and/or repair. These valves can be excluded if existing operational valves are located
in the vicinity of the new installation.
• If air in the pipeline is of concern (as is the case in Indore) an air valve should be installed upstream
of the meter. Meters are designed to measure water flow and will be in-accurate if there is air in
the pipeline. Software developed by the air valve manufacturers should be used be used to size
the air valves.
• A dismantling joint (i.e. Viking Johnson Coupling or similar – see Appendix G) should be provided
in the installation to enable easier removal of fittings during maintenance.
A typical design drawing for a mechanical meter is shown in Appendix G.
50
It is normal practice to house meters and associated fittings in a brick or concrete chamber depending
on the site conditions. The following issues should be considered when designing the chamber:
• Working space should be allowed underneath the pipework to allow for easy maintenance of
fittings (i.e. remove bolts etc). The working space should also be sufficient to easily remove the
sieve of the strainer. For Y-type strainers this will require lowering the sieve from the strainer
body.The clearance required to remove the sieve can be obtained from the strainer manufacturers.
• The overall inside height of the chamber should be sufficient for an average person to stand up
while performing maintenance work. A guideline for the inside height is 1.8 m to 2.2 m with an
inside width of between 1.4 m and 1.6 m.
• The pipework should be anchored in the walls of the chamber.
• The pipework should be supported with brick or concrete plinths underneath all fittings.
• Air ventilators should be provided if possible to reduce condensation.
• Where possible, the roof of the chamber should be 300 mm to 500 mm above the natural ground
level. If the top of the chamber is level to the natural ground the chamber can easily be covered
with mud during heavy rainstorms. Where traffic safety is of concern the top of the chamber
should, however, be flush with the road or sidewalk and designed to minimise ingress of rain.
• Provision should be made for a sump in the floor of the chamber, below one of the manhole
covers, to allow for collection of water when pumping water out of the chamber with a submersible
pump.
• If security is of concern a lockable manhole cover should be provided to prevent unauthorized

access to the chamber.
A few photographs showing the process of installing a new meter installation are shown in
Figure C-2 to Figure C-4.
(a) (b)
Figure C-2: (a) Exposed pipe with temporary supports;

(b) Cutting into asbestos cement pipes
51
(a) (b)
Figure C-3: (a) Installing new pipework and fittings;
(b) New pipework completed with concrete floor in place
(a) (b)
Figure C-4: (a) Brickwork completed with anchor block visible;
(b) Completed chamber with lockable manhole cover
52
Appendix D
Consumer Meter Test Procedure
Appendix D provides a summary of a useful test procedure that can be used to test consumer water
meters to evaluate whether or not they are reliable and the likely error associated with meter under-
registration.
A sample of properties is selected for the meter tests. Field report sheets are then prepared including
spaces for address, meter type and before and after test readings. The consumers whose meters are
to be tested should be notified in advance. At the same time as the notifications are sent, the meters
should be visually inspected. It should be confirmed that the meter visibly stops when no water is
being used. This is also a useful indication if there are any leaks are on the premises and if so, the leaks
should be repaired before the meter accuracy test is undertaken. If the leak can not be repaired, the
particular consumer meter should not be included in the test, since the test is only effective if the
meter comes to a complete stop when no water is being used.
Three tests each for slow, medium and fast flow rates should be carried out (in total nine tests per
meter). At least two of the three tests at each flow rate should yield consistent results; otherwise the
tests should be repeated. The following table provides details of the various flow rates.
Table D-1: Flow rates used when testing domestic meter
Meter size Flow Rate

Slow Medium Fast
15 mm 66 – 56 450 -550 1500 – 1600
20 mm 110 – 130 900 – 1100 2300 - 2700
The theory of the test is based on measuring volumetric flow with meters that are known to be
accurate. A meter testing kit is constructed that consists of either two check meters connected in
series(as shown in Figure D-1 and Figure D-2), or a check meter and a rotometer connected in series.
Figure D-1: Graphical presentation of test apparatus
53
Figure D-2: Photos of test apparatus used in South Africa.
Class “C” meters were used for the check meters.
The test procedure is as follows:
• The apparatus is connected to a garden tap. The occupants of the house should be informed that
they should not flush toilets or use any water for the duration of the test.
• The tap is opened and the flow rate is regulated in one of two ways. 1) If the apparatus has a
rotometer the flow rate can be read directly; 2) If not, a stop watch should be used along with the
check meter in order to get the correct flow rate. The adjusting valve is throttled to achieve the
desired flow rate as indicated in Table D-1. Once the desired flow rate has been achieved the
stop valve is closed completely without moving the adjusting valve. This will ensure that that
adjusting valve stays at the same percentage opening for all the tests.
• The reading on the check meters are recorded as well as the reading on the consumer meter on
the premises. The stop valve is then opened to allow a quantity of water to flow through the
meters. This quantity can be either be a litre if the consumer meter is able to record to litres
(3 decimal points), in which case one whole revolution of the third decimal point should take
place. If the meters have only two decimal points the volume passing through the meter would
then be 10 litres, in this case one whole revolution of the second decimal point should take place.
The following table represents the approximate time that the tests should take at the various
flow rates and different volumes for a 15 mm meter. It is recommended that approximately 10 litres
be used (rather than 1 litre) for the fast flow rate since 2.32 seconds as required to pass 1 litre of
water through the meters is a very short time period.
54
Table D-2: Approximate times for meter tests
Volume Slow Medium Fast
1 litre 1 minute 7.2 sec 2.32 sec
10 litres 10 minutes 72.3 sec 23.2 sec
• Once the required volume has passed through the meter, the stop valve should be closed quickly.
The readings on all meters are then recorded. If the apparatus consists of two check meters, these
should be checked against each other and the average of the two values used in the calculation.
• The results are then analysed using the following equation. The equation is used to calculate the
% error at the slow, medium and fast flow rates. If the % error is positive, it indicates that the
meter overestimates the flow (very unusual) and a negative error indicates an underestimate of
the flow which is the normal situation.
Vin situ – Vcheck

Error (%) = x 100
Vcheck
Where:
Vin situ = Volume through consumer meter

Vcheck = Average volume through check meters.
Error (%) = The percentage error of the consumer meter.
55
Appendix E
Meter Cost Estimates
Meter Cost Estimates (Rupees)

The costs quoted were obtained from South Africa in July 2004 and should serve as an indication
only. (Exchange rate of South African Rand vs. Indian Rupee: 1 Rand = 8 Rupees)
All costs should be verified and checked with local manufacturers, suppliers and contractors in India.
Mechanical meter installations (One directional)*
* No lightning protection and cables required
Magnetic flow meter installations (One or two directional)
Remarks: 1. No valves or strainers required.

2. The cost to get electricity on site was not included.
56
Ultrasonic flow meter. Installed on outside of pipe (One or two directional)
Remarks: 1. No valves or strainers required.

2. The cost to get electricity on site was not included.
Installation cost (in Rs.)
57
Appendix F
Simple Method to Measure Water Pressures
Appendix F provides a summary of a useful procedure to measure pressures at garden taps.
This is an easy low cost method that can be used to gain an understanding of the operating pressures
in a water distribution system. Information on the pressures in a specific area can greatly assist the
engineers to decide which WDM intervention, if any, should be implemented.
The test apparatus is made up of a standard pressure gauge, garden tap connection and galvanised
pipe fittings. The pressure gauge can be obtained from any control valve supplier and the garden tap
connection/pipe fittings can be obtained from most hardware stores. Photographs of a typical
pressure test apparatus are shown in Figure F-1.
Figure F-1: Photos of a typical pressure test apparatus
58
Appendix G
Design Drawing for 100 mm Diameter Mechanical Meter Installation
59
60
Appendix H
Preliminary Water Balance Calculations for Indore
Data Used for Water Balance
The data used in the water balance were obtained from reports and personal conversations with
the staff of IMC (See Table H.1 for summary). Assumptions were also made in cases where no reliable
information could be obtained. All data should therefore be verified and updated where necessary
by the Engineers of IMC. (Latest data were received from IMC on 2006/3/30).
Table H.1: Summary of data used in the Water Balance for Indore
Item Value or assumption used in Water Balance
Number of legal connections 155,889 Domestic Connections
1253 Commercial Connections
1026 Industrial Connections - (92 “Other” connections were

also indicated – for the purpose of this exercise they were
added to the Industrial connections.)
Therefore: Total Industrial connections: 1118
158,260 Total Billed Connections
7263 Community Standposts
165,523 Total Legal Connections
Number of illegal connections Varies between 20,000 and 40,000
Average operating pressure when Varies between 3 m and 15 m.

system is pressurised
Time the system is pressurised 45 min/day
Length of mains 1,400 km (Some sources indicate 1,200 km)
Length of bulk supply mains Narmada – 70 km length @ 25 m pressure

Yashwant – 21 km length @ 25 m pressure
Total System Input (m3 /year) Narmada – 180,000 X 365 = 65,700,000 m3/yr
Yashwant – 20,000 X 365 = 7,300,000 m3/yr
Bilawali – 0 m3/yr
Tubewells – Tubewells were not included in the analysis.

The supply from tubewells was not taken into account and
also not the demand on tubewells. This was done because of
the uncertainty of the tubewell data.
Total – 73,000,000 m3/yr
Billed Metered Consumption (m3 /year) 59 Bulk Consumers (8.2 MLD/day)
8.2 X 365 = 2,998,128 m3/yr
Bulk consumers includes Mhow Army Base
61
Item Value or assumption used in Water Balance
Billed Unmetered Consumption (m3 /yr) Legal domestic Connections (155,889)

= 100 MLD (Obtained from IMC)
This calculates to approximately 19 kl/month/connection
This appears to be very high for properties that receive water
at only 7m of pressure, 45 min a day and sometimes only
every second day. This should be verified through installation
and measurement of a few domestic meters.
A more realistic estimate will probably be 70 MLD.
(13 kl/month/connection)
= 70 MLD X 365 = 25,550,000 m3/yr
Commercial Connections (1253)

= 25 MLD X 365 = 9,125,000 m3/yr
Industrial Connections and Others (1026 + 92)

= 15 MLD X 365 = 5,475,000 m3/yr
Dewas Town
1,825,000 m3/yr (Obtained from IMC)
Unbilled Metered (m3 /year) 0 m3/yr
Unbilled Unmetered Consumption Water Tankers

(m3 /yr) 8.75 MLD for 3 months
1 MLD for other 9 months
Average: Approximately 3 MLD
= 3 X 365 = 1,095,000 m3/yr
7263 Public Standposts
@ 25 litre/person/day, @ 7 person/household,
@ 10 households/standposts
7263 X 25 X 7 X 10 X 365 /1000 = 4,639,241 m3/yr
The standposts (additional 7000) from tubewells were
excluded because the input volume from tubewells were also
excluded previously.
Unauthorised Consumption (m3 /yr) Illegal Connections (20,000 to 40,000)

Estimated to be between 10 MLD and 20 MLD
= 10 X 365 = 3,650,000 m3/yr
Cost Factors Water Production cost = 12.5 Rupees/ m3

Average Water Sales cost = 15 Rupees/ m3
Annual Running cost of system = 850,000,000 Rupees
62
Aqualibre Water Balance Model
System Data
Water Undertaking Details
Water Undertaking Indore Municipal Corporation
Address
City State Zip
Tel Fax e-mail
Contact Person
System Pressure
Average System Pressuremeters 10.00 30
Percentage Time Pressurised 4.17 30
Customer Meters Error %
Total Customer Meters
Mains Kilometers Error %
Total Trunk Mains 90.0 8.1
Total Distribution Mains 1,400.0 10.0
Total Mains 1,490 9.4
Connections and Properties Error %
Total Number of Units 165,582 9.5
Total Connections 165,582 9.5
Total Properties 165,582 9.5
63
Name of Water Undertaking Indore Municipal Corporation

Supply Area: 001
Period of Record: January 2004 to December 2004 (365 days)
Water Balance Units: cubic meters
Primary Water Balance
System Input: Own Sources 73,000,000 9.1

From Narmada River 180 MLD 65,700,000 10.0
From Yashwant Sagar 20 MLD 7,300,000 10.0
Exclude Tubewells (0)
Bilawali Tank (0)
System Input: Imported Sources

No other imported sources
Total System Input 73,000,000 9.1
Billed Metered Consumption: Domestic Consumers
Billed Metered Consumption: Non-Domestic Consumers 2,998,128 10.0

59 Bulk Users 2,998,128 10.0
Total Billed Metered 2,998,128 10.0
Billed Unmetered Consumption: Domestic Consumers 25,550,000 30.0

From 155,889 flat tariff connections 100 MLD 25,550,000 30.0
Billed Unmetered Consumption: Non-Domestic Consumers 16,425,000 13.1

Export to Dewas town 1,825,000 20.0
Commercial 25 MLD 9,125,000 20.0
Industrial 15 MLD 5,475,000 20.0
Total Billed Unmetered Consumption 41,975,000 19.0
64
Unbilled Metered Consumption
There are no unbilled metered connections (0)
Unbilled Unmetered Consumption: Domestic Consumers 5,734,241 16.6

Water tanker 1 MLD (9 months) 8.8 MLD (3 months) 1,095,000 20.0
7263 Public Standposts 25 I/c/p (7 person/house) (10 hours) 4,639,241 20.0
Customer Metering Inaccuracies and Data Handling Errors 333,125.33 10.0

Total Metering Errors 333,125.33 10.0
Data Handling Errors
Unauthorised Use 3,650,000 30.0

20,000 – 40,000 Illegal Connections 10 MLD 3,650,000 30.0
Losses from Storage Facilities

Storage Facility Losses
Losses by Volume
65
Primary Water Balance Summary
Cubic meters Error %
Billed Authorised Consumption 44,973,128 17.7
Billed Metered Consumption 2,998,128 10.0
Billed Unmetered Consumption 41,975,000 19.0
Unbilled Authorised Consumption 5,734,241 16.6
Unbilled Metered Consumption
Unbilled Unmetered Consumption 5,734,241 16.6
Apparent Losses 3,983,125.33 27.5
Unauthorised Use 3,650,000 30.0
Consumption Meter Error 333,125.33 10.0
Total System Input 73,000,000 9.1
Water Losses 22,292,631 46.7
Apparent Losses 3,983,125.33 27.5
Real Losses 18,309,505.67 57.2
Bulk Storage Leakage and Overflow
Revenue Water 44,973,128 17.7
Non-Revenue Water 28,026,872 37.3
66
Performance Indicators
Base Data Used in Calculations Value Error% Lower Estimate Upper Estimate
Averager pipe length from street edge to meter 10.00 0 10.0 10.0
Length of trunk mains 90.0 8.1 83 97
Length of distribution mains 1,400.0 10.0 1,260 1,540
No. of Service Connections 165,582 9.5 149,852 181,312
Connection Density (distribution mains) 118.27 13.8 101.96 134.59
Average System Pressure 10.00 20 20.0 30.0
Average Trunk Pressure 25.00 20 7.0 13.0
Percentage time pressurised – System 4.17 30 2.9 5.4
Percentage time pressurised – Trunk Mains 100 0 100.0 100.0
Number of Accounts 165,582 9.5 149,925 181,239
Unavoidable Annual Real Losses m^3/day Error %
On Trunk Mains 41 21.6

On Distribution Mains 11 12.6
On service connections to street boundary 55 31.9
On service connections to street edge to meter 17 31.9
Total unavoidable real losses 124 42.8
Cost of Running the System Rupee/m^3 Rupees
Real Loss Cost :12.5000 Apparent Loss Cost :14.0000 System Cost : 850,000,000
Performance Indicators Best Estimate Lower Estimate Upper Estimate
Non Revenue Water Basic (IWA Level 1, Fi37)

Percentage of System Input by Volume 38.4 20.1 56.7
Non Revenue Water Basic (IWA Level 1, Fi38) 42.93 22.5 63.4
Percentage of System Input by Value
Real Losses Basic (IWA Level 1, Op24)
I/connection/day when pressurised 7,245.1 2,515.2 11,975.1
I/km mains /day 856,902.6 296,836.9 1,416,968.2
Real Losses Intermediate
I/connection/day/m pressure when pressurised 724.5 203.5 1,245.6
I/km mains/day/m pressure 85,690.3 24,065.7 147,314.8
Real Losses Detailed (IWA Level 3, Op25)
Infrastructure Leakage Index 403.44 115.18 691.69
67
Appendix I
Paper on Accuracy Limitations of
the Infrastructure Leakage Index (ILI)
Accuracy Limitations of the ILI – Is it an Appropriate Indicator for Developing Countries?

R Liemberger*, R McKenzie**
*Bahnhofstrasse 24, A-9020 Klagenfurt, Austria, roland@liemberger.cc
**PO Box 1522, Brooklyn Square, 0075, Pretoria, South Africa, ronniem@wrp.co.za
Keywords: ILI, accuracy limitations, developing countries
Introduction
Since the level of water losses from potable water distribution system is one of the key efficiency
issues, it would be expected that reliable performance indicators are used for benchmarking,
international performance comparison or target setting. Unfortunately this is not the case in most
parts of the world and utility managers and consultants around the world as well as the International
Financing Institutions still continue to express water losses as % of System Input Volume.
The serious problems of using % of system input as a key PI have been highlighted in many
conferences around the world. (e.g.Liemberger, 2002) and there is general consensus that this indicator
should not be used for comparison or target setting purposes.
Experienced practitioners consider the Infrastructure Leakage Index (ILI, Recommended by IWA and
AWWA) as the most appropriate performance indicator for real losses (physical losses). In many cases,
however, poor data quality as well as low operating pressures, particularly in developing countries,
are often cited as motivation for not using the ILI in which case the % of system input tends to
re-appear.
Brief description of the ILI

The ILI is effectively an indicator of how well a distribution network is being managed and maintained
at the current operating pressure. It is the ratio of Current Annual Volume of Real Losses (CARL)
to Unavailable Annual Real Losses (UARL).
ILI = CARL / UARL
Being a ratio, the ILI has no units and thus facilitates comparisons between countries that use different
measurement units (U.S. metric or imperial). But, what are unavoidable losses and how are they
calculated? Leakage management practitioners around the world are well aware that Real Losses
will always exist – even in new and well managed systems. It is simply a question of how high these
unavoidable losses will be.
The complex initial components of the UARL formula were converted to a ‘user friendly’ pressure-
dependent format for practical use:
UARL (liters/day) = (18 x Lm + 0.8 x Nc + 25 x Lp) x P
68
where Lm = mains length (km); Nc = number of service connections, Lp = total length of private pipe,
property boundary to customer meter (km); P = average pressure (m).
Is the ILI well known and widely used?

The answers unfortunately is NO. The authors are most certain that a minority of utility managers
and consultants (presumably a single digit percentage) around the world have heard of the ILI or
using it regularly. However, significant promotional efforts have been made:
• in Australia, the WSAA is publishing the ILI of their members on an annual basis.
• in New Zealand it was introduced in 2001 and is currently being used by many water utilities
throughout the country.
• in South Africa the ILI is well accepted and used by many utilities. It is soon to be implemented as
the key PI for assessing water losses by the regulator throughout the country.
• in Italy, by the “water loss user group”.
• in North America, by the AWWA water loss control committee.
by members of the IWA water loss task force (WLTF) in their working environment.
One of the key challenges to the WLTF is to develop a strategy of how best to introduce the ILI to
utility managers and consultants around the world.
Part of the problem is that people are simply not aware of the ILI – and the other part of the problem
is the limited understanding and acceptance of the ILI. In this regard, may practitioners prefer not to
use the ILI for one or other of the following reasons:
• the accuracy of the UARL formula is questionable;
• data required to calculate UARL are not available;
• nobody uses and understands the ILI – it is basically not accepted in the industry;
• the ILI is not needed – the classical performance indicators (like real losses per km mains per day)
are sufficient.
In addition to the above there are another two reasons why the ILI is sometimes not used:
• 10% water losses always sound acceptable and low – while the ILI in many cases highlights that
the true leakage performance is far from satisfactory.
• Warnings from the Water Losses Task force that the ILI must not be used for systems with less than
25 m average pressure or less than 5,000 connections.
Initial applicability limitations for the ILI

The equation used for calculating Unavoidable Annual Real Losses (UARL) (Lambert et al 1999),
is based on components of Real Losses originally calculated at 50 meters pressure, then corrected for
pressure, assuming a linear pressure: leakage rate relationship for large systems with mixed pipe
materials.
Practical limitations placed on applying the UARL formula were, originally, that systems should not
have less than 5,000 service connections, not less than 20 connections/km of mains, and not less
69
than 25 meters of pressure. Following recent research, the lower limits for number of service
connections is now 3,000 and the lower limit on density connections has been removed.
The lower limit of 25 meters for pressure was introduced to avoid significant errors from extrapolating
the assumption of a linear pressure: leakage relationship to systems with 100% flexible pipes at low
pressure, where the N1 exponent would be close to 1.5 (note: Leakage varies with PressureN1).
Advanced pressure reduction is becoming an increasingly popular technique to reduce both leakage
and burst frequencies and in some cases utility managers try to maintain system pressures to avoid
the average pressures exceeding 25 metres. To compound the problem, most of water distribution
networks in the developing world do not even enjoy continuous supply – and pressures of more
than 10 or 15 metres tend to be the exception and not the rule.
Should such utilities be discouraged from using the ILI ?
General ILI accuracy considerations

The accuracy of the ILI depends less on the accuracy of the (empirical) UARL formula but on the
accuracy of:
• annual volume of real losses
• average pressure
• distribution network data
The following example demonstrates the accuracy problem of a system with a low level of leakage:
• System input volume: 45 million m3/year (+/- 1%, this is already considered a very good accuracy).
• Real Losses: 4.1 million m3/year (but since the amount is small the accuracy is only +/-11%, using
the statistical 95% confidence limits methodology).
• Length of mains: 2000 km, number of connections: 200,000 (both +/- 1%).
• Average length of private supply pipe 5 m (+/- 20%).
• Average pressure 40 m (+/- 5%).
The ILI was calculated to be 1.27 – but the 95% confidence limits are 1.12 and 1.43. This means that
with 95% confidence it can be assumed that the ILI of this system is between 1.12 and 1.43 – although
the assumed data quality of this example is truly excellent.
If the system input of this example is changed to 70 million m3 (leaving everything else unchanged)
and therefore the real losses increase by 30 million m3/year to 34.1 million m3, the ILI would be between
9.9 and 11.2 (best estimate: 10.6).
The first example would mean an ILI accuracy of +/- 12%, the second one +/- 6%. Adding this to the
accuracy limitation of the UARL formula (at 40 m pressure up to +/- 10%) it is obvious that the ILI’s
overall accuracy will not be less than 15% but could be considerably more.
Another problem is the accuracy of the average pressure since this is normally not calculated by
water utilities and is often estimated based on a few pressure measurement (if any). It is certainly
unusual for the accuracy of the system wide average pressure to be better than +/- 10%. Furthermore,
increasing average pressure is a simple way in which utility managers can “improve” their ILI.
70
Taking the previous example and reducing average pressure by 10% (from 40 to 44 m), the
corresponding ILI’s would be reduced to between 1.0 and 1.3 or 9.0 and 10.2 respectively.
Showing too many decimal places sends a misleading signal of the ILI’s accuracy and the authors
therefore recommend the following:
• don’t show decimal places for ILIs > 10.

• use only one decimal place for ILI’s below 10.
• in a more comprehensive analysis, always calculate and report the potential ILI bandwidth.
The accuracy issue must be taken into account if the ILI is used for regulatory purposes.
Data availability and quality in developing countries

When introducing the ILI in the developing world, most utilities initially face the following problems:
• no reliable information on the true network length. Maps (if any) often show only a fraction of the
existing network (result: UARL underestimated ILI overestimated)
• number of service connections is not known – number of customers is used instead (number of
customers will in most cases be higher than the number of connections, result:UARL overestimated
ILI underestimated)
• neither pressure data not pressure loggers available. Estimated average pressure usually too high
(“wishful thinking”!) (result: UARL overestimated ILI underestimated)
• high level of apparent losses (difficult to estimate) and therefore unreliable and inaccurate volume
of real losses.
The following three examples are from cities in Vietnam, Indonesia and Sri Lanka. In all three cases
substantial field work (flow and pressure measurements) and comprehensive data collection and
analysis were undertaken. Water balances and performance indicators, including accuracy estimations,
were undertaken using the AqualibreTM Water Balance Software.
Table 1: Annual volumes and system characteristics of three cities in developing countries
Vietnam Indonesia Sri Lanka

+/- +/- +/-
3
System Input Volume [m /a] 365,440,000 2% 20,415,203 1% 10,263,867 2%
Authorised Consumption 214,830,000 0.3% 12,247,970 0.0% 5,626,176 0.3%
Billed Consumption 213,730,000 0.0% 12,235,450 0.0% 5,589,676 0.0%
NRW 151,710,000 4.9% 8,179,753 3.5% 4,674,191 4.4%
Water Losses 150,610,000 4.9% 8,167,233 3.5% 4,637,691 4.4%
Apparent Losses 17,040,000` 9.9% 1,397,676 13.5% 547,573 4.8%
Real Losses 133,570,000 5.7% 6,769,557 5.1% 4,090,118 5.0%
Length of mains [km] 2,647 5.0% 756 2.8% 421 1.7%
Number of Connections 426,000 0.7% 45,280 1.7% 25,229 1.9%
Average length of private pipe [m] 0 5 20.0% 5 25.0%
Total length of private pipe [km] 0 226 126
Supply Time [%/day] 99% 10.0% 95% 3.0% 86% 10.0%
Preassure [m] 12 10.0% 11 10.0% 11 15.0%
71
Table 2: Real loss performance indicators

I/conn./day 866 430 519
min 766 403 460
max 966 457 577
I/conn./d/m preassure 72 38 48
min 60 34 39
max 84 43 57
ILI 79 31 39
min 67 24 32
max 91 37 47
Simulating the scenario of an overestimated number of service connections (by using the number
of customers) the number of connections was reduced by 20% and the changed real loss performance
indicators can be seen in Table 3.
Table 3: Real loss performance indicators after number of connections has been reduced by 20%

I/conn./day 1083 430 519
min 958 403 460
max 1208 457 577
I/conn./d/m preassure 90 36 48
max 60 32 39
min 84 41 57
ILI 96 36 46
min 80 32 38
max 111 41 55
Going a step further and assuming that the drawings were incomplete and increasing the length of
mains by 20%, the ILI would of course change (see Table 4):
Table 4: Real loss performance indicators after increasing length of mains by 20%

ILI 93 34 44
min 79 20 36
max 108 39 55
Average pressure in all three systems is well below 15 m (11 - 12 m) and therefore the question:
how wrong are the calculated ILI values?
Thornton and Lambert (2005) suggest a use of a pressure correction factor in the UARL formula that
would in this case be in the order of 0.6 (since most but not all leaks are on flexible pipes).
Consequently the “true” ILI values would be significantly (60%) higher. In the Vietnamese situation,
the ILI would increase from between 67 and 111 to between 112 and 160. The issue to be resolved is
whether it is necessary or not to introduce a new parameter to the ILI and if the adjusted ILI estimates
72
are more reliable and meaningful than the original values. The answer to this question is highly
debatable and the authors tend to favour the original unadjusted values on the grounds that a new
parameter may simply confuse a methodology that has yet to be universally accepted and the impact
of the adjustment is not particularly important once the ILI’s are already so high. It is after all considered
to be a relative indicator which is used to highlight whether a system has a serious leakage problem
or not. A system with an ILI of 30 will be regarded as having a serious leakage problem as will a
system with a value of 130. It is, however, important to understand the ILI values in low pressure
situations tend to err on the low side and can often be up to 60% higher – depending on the material
mix of mains and service connections.
How meaningful are ILI values of distribution networks in developing

countries?
The present approach of expressing water losses as “Non-Revenue Water” in terms of percentage of
system input volume often significantly underestimates the true extent of the leakage problem in
developing countries and tends to penalise systems with lower consumption. This can be clearly
seen from the previous examples:
• Vietnam 42% (ILI = 79)

• Indonesia 40% (ILI = 31)
• Sri Lanka 46% (ILI = 39)
As can be seen the % losses do not reflect the huge difference in leakage performance between the
Vietnam system and the remaining two systems.
It is therefore the view of the authors that despite the accuracy limitations described above, the ILI is
still the best indicator to quickly describe the level of real losses of a system. Many utility managers
and consultants, however, remain reluctant to switch from the “prehistoric” % UfW or % NRW to the
ILI (both in the developed and the developing world). To help address this issue, a simple look-up
table based on the ILI was suggested by Liemberger (2005). This allows a first simple assessment
using liters per connection per day in combination with the approximate average pressure.
This table has meanwhile been included in the new water loss reduction training modules of the
World Bank Institute (WBI, the capacity building arm of Worked Bank Group).
73
Technical Liters/connection/day
(when the system is pressurised) at an average pressure of:
Performance ILI
Category 10 m 20 m 30 m 40 m 50 m
A 1-2 <50 <75 <100 <125

Developed
Countries
B 2-4 50-100 75-150 100-200 125-250
C 4-8 100-200 150-300 200-400 250-500
D >8 >200 >300 >400 >500
A 1-4 <50 <100 <150 <200 <250

Developing
Countries
B 4-8 50-100 100-200 150-300 200-400 250-500
C 8-16 100-200 200-400 300-600 400-800 500-1000
D >16 >200 >400 >600 >800 >1000
Figure 1: Proposed use of ILI as PI in developed and developing countries (Liemberger, 2005)
As can be seen from the figure, different ILI ranges have been provided for developing and developed
countries. The proposal attempts to classify the leakage levels within the Water Utilities into four
categories based on the ILI value as follows:
Category A: Further loss reduction may be uneconomic unless there are shortages; careful analysis
needed to identity cost effective improvement
Category B: Potential for marked improvements; consider pressure management; better active
leakage control practices, and better network maintenance
Category C: Poor leakage record; tolerable only if water is plentiful and cheap; even then, analyze
level and nature of leakage and intensify leakage reduction efforts
Category D: Horrendously inefficient use of resources; leakage reduction programme imperative
and high priority
Since the vast majority of water utilities in the developing world will have ILI values exceeding the
upper limit of the table (16), reducing real losses to below 16 will be the starting point. As soon as
utilities start to introduce active leakage control, carry out flow and pressure measurements, and
improve overall data quality the bandwidth of the ILI will dramatically be reduced. Often leakage
reduction will also lead to an improved supply situation and pressure increases that will make the
calculation of the UARL formula more accurate.
Conclusions
The ILI has, in recent years, proved to be a very useful performance indicator when Benchmarking
leakage in water distribution systems.
Although various limits on the use of the ILI have been proposed by it’s original developer to safeguard
the soundness of the results, the author have found that it can still provide a useful indication of
high leakage even when used outside the normally accepted limits. It is certainly also a most suitable
indicator for water utilities in developing countries and it is now understood that “true” ILI’s of low
pressure system will always be higher than the calculated figures. This suggests that the leakage
problem in developing countries is even more serious than previously anticipated.
74
There have been various suggestions on how the ILI can be improved by refining certain coefficients
or adding new terms in the underlying equations. While further research should never be discouraged,
the authors do not feel that modifications are necessary at this time. There is a danger that modifying
the equations before the basic approach has been universally accepted will undermine much of the
confidence that has been gradually created over the past five years. It took a tremendous effort from
the original developers of the ILI together with its numerous proponents around the world to get
the ILI officially endorsed by the IWA and it is unlikely that this can be repeated with a modified
formula. Changes in the UARL formula will certainly disrupt and even confuse users around the world
that are not so familiar with concept and methodology. The present UARL formula has been published
in papers and books around the world and it will take many years to spread new information. It may
not be the interest of the industry to create a new UARL formula as this is likely to lead to at least two
versions being in use at the same time – clearly a difficult and contentious issue that will no doubt
draw considerable debate.
75
References
Lambert A, Brown T.G., Takizawa M. and Wiemer D. (1999) A Review of Performance Indicators for Real
Losses from Water Supply Systems. AQUA, Vol 48 No. 6. ISSN 0003-7214
Lambert AO (2001) What do we know about Pressure: Leakage Relationships in Water Distributions
Systems?
IWA Conference ‘System Approach to Leakage Control and Water Distribution Systems Management’ in
Brno, Czech Republic, May 2001. (download from www.liemberger.cc)
Lambert, AO and McKenzie, RS (2002) Practical Experience in using the Infrastructure Leakage Index.
Paper to IWA Conference ‘Leakage Management – A Practical Approach’, Cyprus, November 2002.
(download from www.liemberger.cc)
Liemberger R. (2002): Do You Know How Misleading the Use of Wrong Performance Indicators can be?
IWA Specialised Conference ‘Leakage Management – A Practical Approach’, Cyprus, November 2002,
Conference Proceedings. ISBN 9963875904 (download from www.liemberger.cc)
Thornton J., Lambert A (2005) Progress in practical prediction of pressure: leakage pressure:
burst frequency and pressure: consumption relationships, Paper to Leakage 2005 Conference,
Halifax, September 2005
Seago C, McKenzie R., Liemberger R. (2005) International Benchmarking of Leakage from Water Reticulation
Systems, Paper to Leakage 2005 Conference, Halifax, September 2005
76
Water Demand
Management Strategy
and
Implementation Plan
for
INDORE
Part-II
Financial, Institutional and Policy Reforms
77
Contents
Chapter 1: Introduction
1.1 Objectives of the Report 83
1.2 Scope of the Report 83
1.3 Partners and Stakeholders 84
Chapter 2: Financial assessment and recommendations for the Waterworks Department

2.1 Background 85
2.2 Analysis of Income-Expenditure Statement 86
2.3 Current Water Tariff Structure & Collection Efficiency 101
2.4 Key Recommendations 103
Chapter 3: Water Demand Management Strategy: Institutional and Policy Reforms

3.1 Introduction 107
3.2 Current Legal and Institutional Framwork for provision of water supply services in Indore 109
3.3 Introduction to SWOT 112
3.4 Formulation of a Vision and Policy for Provision of Water Supply Services 117
3.5 Performance Measurement 118
3.6 Management Information System 119
3.7 Capacity building 121
3.8 Regularisation of illegal connections 125
3.9 Consumer awareness 127
3.10 Regulation 129
3.11 Organisational Restructuring 131
3.12 Public Private Partnership Arrangements 132
Annexures
2.1 Existing Tariff Structure in Chennai, Bangalore and Delhi A-3
3.1 Rationale for Reforms in urban water supply sector:
Some initiatives at the national level A-12
Bibliography A-18
Note:
Rs. 1 crore: Rs. 10 million
Rs. 1 million: Rs. 10 lakhs
Rs. 10 lakhs: Rs. 1,00,000
79
Tables
2.1 Revenue receipts statement of the Water Department, IMC 87

2.2 Revenue expense statement of the Water Department, IMC 88
2.3 Capital receipts for water operations, IMC 95
2.4 Capital expenditure for water operations, IMC 96
2.5 Assessment of capital expenditure & capital account deficit 96
2.6 Annual surplus/loss level of water operations, IMC 98
2.7 Existing tariff schedule 101
2.8 Charges for new water connection 102
2.9 Illegal to legal conversion charges – Domestic connection 102
3.1 SWOT Framework 113
3.2 Results of SWOT analysis 116
3.3 Examples of four types of performance indicators applied to urban 119
water supply service
3.4 Training modules 124
3.5 Indian experience in Privatisation of Water Supply and Sanitation 133
3.6 International examples of options for private sector participation and allocation 135
of responsibilities
Figures
3.1 Key issues in urban water supply: The vicious circle 107
3.2 Institutional arrangements in Madhya Pradesh for provision of urban water supply 110
3.3 Institutional structure of Indore Municipal Corporation 110
3.4 Organisational chart for Narmada Water Project, IMC 111
3.5 Implementing Performance Measurement System 121
3.6 Capacity Building Framework 123
3.7 Framework for IEC Strategy 128
Boxes
2.1 Electricity Tariff Reforms in India 106
3.1 Organisational Problems on Water and Sanitation: Tenth Five-year Plan,
Government of India 108
3.2 Bangalore Information System on Networks (BISON) 119
3.3 Human Resource Development, Chennai 122
3.4 Reducing Unaccounted-for Water:
Strategy adopted by Nagpur Municipal Corporation 126
3.5 Legalizing water in slum colonies – Bangalore 127
3.6 Setting up of Maharashtra Water Regulatory Commission 131
80
List of Abbreviations
ADB Asian Development Bank

BWSSB Bangalore Water Supply and Sewerage Board
CWRPS Central Water and Power Research Station
CMWSSB Chennai Metropolitan Water Supply and Sewerage
CAGR Compounded Annual Growth Rate
CII Confederation of Indian Industry
CPI Consumer Price Index
DMA District Metered Areas
GIS Geographical Information System
IIM Indian Institute of Management
IMC Indore Municipal Corporation
ILI Infrastructure Leakage Index
IWA International Water Association
KUIDFC Karnataka Urban Infrastructure Development Finance
MAPCOST Madhya Pradesh Council for Science and Technology
MDG Millennium Development Goal
ML Million Litres
NMC Nagpur Municipal Corporation
NRW Non-Revenue Water
NGO Non-Governmental Organisaton
OHT Over Head Tanks
PSC Pre Stressed Concrete
PHED Public Health and Engineering Department
RPA Receipt and Payment Account
RRL Regional Research Laboratories
RWA Resident Welfare Association
SGSITS Shri G.S Institute of Technology of Science
MPSEB Madhya Pradesh State Electricity Board
SWOT Strength, Weakness, Opportunity, and Threat
ULB Urban Local Bodies
VMC Vishakhapatnam Municipal Corporation
WDM Water Demand Management
WAC Water for Asian Cities Programme
WRP Water Resource Planning and Conservation
WTP Water Treatment Plant
HUDCO Housing and Urban Development Corporation Ltd.
81
1 Introduction
Over the past decade sustainable access to water supply has emerged as one of the most critical
development challenges facing the developing world. Scarcity of water resources coupled with
inequitable distribution and inefficient use and distribution of water have led to a situation wherein
a large percentage of the population in urban centres across the country have no access to safe
drinking water and at the same time huge quantities of water is wasted through leakages and
pilferages. Water Demand Management (WDM) which essentially encourages improvements in water
distribution and use rather than augmentation of supplies has over the years emerged as an
alternative approach to securing access to water supply for everyone on a sustainable basis.
In the above context, TERI in partnership with UN-HABITAT and Water Resource Planning and
Conservation (WRP), South Africa has undertaken a project to conduct a rapid assessment of the
water supply services in Bhopal, Gwalior and Jabalpur so as to develop a Water Demand Management
strategy and implementation plan for these cities. For Indore, as assessment of the financial,
institutional and policy reforms was made and strategies have been proposed by TERI. The project is
also aimed at building capacities for mainstreaming WDM principles in water supply planning at
different organisational levels in these Municipal Corporations.
The project is supported under the Water for Asian Cities (WAC) programme, a collaborative initiative
between United Nations Human Settlements Programme (UN-HABITAT), Asian Development Bank
(ADB) and Governments of Asia. The WAC program supports Capacity Building, Mobilizing political
will, enhancing Human Resources, Water Education, and Pro-poor investments in Water and Sanitation
sector aimed at meeting the Millennium Development Goal (MDG).
1.1 Objectives of the Report

This Report has been prepared to build upon the WDM strategy prepared by WRP, South Africa
by providing insights into the financial and institutional aspects of Water Supply operations in Indore
and provide recommendations for reforms in the city in terms of improvements in financial
management and institutional/policy framework.
1.2 Scope of the Report

This Report basically aims at a rapid assessment of the existing financial management systems in
Indore Municipal Corporation:
• Identification of key issues and problems by a SWOT matrix analysis of institutional players.
• Suggesting institutional reforms such as capacity building, performance monitoring and

involvement of private sector etc.
• Suggesting an institutional mechanism for integrated water resource planning.
• Studying the existing tariff structure including billing, pricing, and recovery structure and
suggesting measures for financial sustainability.
83
1.3 Partners and Stakeholders
The project is being executed under the overall guidance of UN-HABITAT and WRP. The following
partners and stakeholders have been involved in the different stages of the project for the collection
of information, its analysis, and capacity building:
1. Indore Municipal Corporation (IMC).
2. Public Health and Engineering Department (PHED).
3. Bulk Consumers: MES, Railways etc.
4. Irrigation Department.
5. Project Monitoring Unit and Project Implementing Agency, Madhya Pradesh Urban Water supply
and Environmental Improvement Project (MPUWSEIP).
6. Project Management Consultants (Louis Berger) and Design and Supervision Consultants
(Shah Consultants) for MPUWSEIP.
Besides these, other partners in the project include Shri G.S. Institute of Technology of Science (SGSITS),
Indore who have supported the capacity building exercise of municipal officials. Other stakeholders
like the Health Department, Central Ground Water Board, Electricity Department, Meteorological
Department, and Population and Census Department, etc. have been approached for inputs and
feedback on the proposed WDM strategy and the implementation plan.
84
2
Financial Assessment and Recommendations
for the Waterworks Department,
Indore Municipal Corporation
2.1 Background
Till the enactment of 74th Constitutional Amendment in 1995, the Public Health and Engineering
Department (PHED) operated and maintained all water projects and schemes within the municipal
limits of Indore city. Subsequently, the responsibility for management of water supply and sewerage
system was transferred to the Indore Municipal Corporation (IMC), with PHED giving the financial
and administrative sanction for all projects. However, the salary of employees under the Narmada
Water Supply Project is borne by the PHED and is allocated to the IMC as annual administrative
grants. Additionally, the planning, design and construction of water schemes continues to be the
responsibility of PHED. As highlighted for municipal corporations in other project cities, the
institutional arrangement between the IMC and the PHED needs to be clarified for the sake of financial
and operational transparency.
At the municipal level, IMC has adopted several measures aimed at introducing prudent financial
management and budgeting. In this direction, the Corporation initiated the double entry accrual
system of accounting in FY 1999-2000, while simultaneously computerizing its budgeting activities.
These initiatives were supplemented by measures to improve billing & collection from existing
revenue sources, rationalization of service charges, increased user-charge recovery, cost savings in
operations and initiation of public-private partnerships. All these initiatives led to a significant increase
in municipal revenues, as is evident from the fact that during the first six years of programme
implementation (1997-2003), the own source revenue generation1 of IMC more than tripled from
Rs. 19.49 crores to Rs. 63.51 crores. The stakeholder interactions also suggested that subsequent to
improvements in data recording and management, the total number of connections has increased
from 70,000 in 1999-00 to 1,52,000 presently.
In FY 2001-02, the corporation successfully issued a Rs. 38 million municipal bond to private
institutional investors. The proceeds of this bond issuance were intended to enable capital
improvements in roads, water and sanitation schemes with active community participation. One of
the noteworthy features of the current accounting practices is the segregation of revenue & capital
receipts and expenditures for various departments (including Waterworks), as well as the amounts
accruing to the current and previous financial years.
In actual income terms, the share of Waterworks Department in total revenue receipts of the Municipal
Corporation (Property Tax, Water Charges, License Fees, Show Tax, Advertisement Tax & Fees, Shop
Rent etc.) has been in the range of 16-18%. On the other hand, the share/proportion of revenue
expenditure of Waterworks Department to the total municipal expenses has been in the range of
30-35%. This reflects the negative contribution of the Waterworks Department to the overall
municipal finances. Our interaction with IMC officials confirmed that deficit from water supply
operations is generally offset with other charges & taxes. The Figure on the following page compares
the net surplus/deficit of the Waterworks Department vis-à-vis the Municipal Corporation.
1
Strengthening the Revenue Base of Indore Municipal Corporation, Indo-US FIRE Project, December 2002
85
It can be observed from the above figure that the Waterworks Department contributes substantially
to the total Municipal Corporation deficit. Moreover, this deficit is projected to deteriorate in the
future, leading to higher extent of cross-subsidization by other services (property, license & show tax
etc.) in favour of water service provision. Clearly, the precarious financial position of water supply
operations needs to be alleviated not only by improving the revenue base & collection methodology,
but also by introducing efficient expenditure-side management strategies.
The analysis in subsequent sections is based on the actual figures for Waterworks Department in
FY 2002-03 & 2003-04 and revised estimates for FY 2004-05 and FY 2005-06. The department-wise
revenue and expenditure break-up for the earlier financial years is not available, and, therefore the
current report is constrained to that extent. Further, the water tariff schedule, which was last revised
in FY 1997-98, has been considered for analyzing the Municipal Corporation’s existing tariff structure
and methodology.
For assessing the financial health of the Municipal Corporation’s water supply operations, this chapter
has been organized into two distinct parts. The first part presents an analysis of the existing financial
(Income-Expenditure) position of the Waterworks Department. In the second part, a broad assessment of
the current tariff structure is presented and analysed.
2.2 Analysis of Income-Expenditure Statement

The revenue and capital receipts and expenditure of IMC’s water supply operations typically comprise
of amounts accruing to the Head Office (H.O.) and to the various supply sources i.e. River Narmada,
Yashwant Sagar/Bilawali Tank and tubewells. Additionally, the IMC reports all charges relating to new
connections, disconnections, regularization and water harvesting under a separate ‘Revenue
Department’. This Department was basically formed to strengthen and centralize the Municipal
Corporation’s revenue billing & collection efforts. Therefore, in the following analysis, income &
expenditure from water supply operations have been computed by aggregating relevant accounting
heads under the Revenue Department, Waterworks H.O., Narmada Project, Yashwant Sagar/Bilawali/
Dev Dharam Tanks and Tubewells. The current functional set-up of water operations of IMC is
summarized in the box below:
86
a. Revenue Account
Revenue Receipts: In municipal finance parlance, these receipts are primarily classified into tax and
non-tax revenues. While the tax revenues include own-generated resources & shared taxes, the non-
tax based revenues are derived from user charges, governmental grants and income from municipal
properties. For IMC, the revenue receipts from water supply operations are projected to increase
from Rs. 30.80 crores in FY 2002-03 to Rs. 59.74 crores in FY 2005-06, representing a CAGR of 24.71%.
However, for the audited information available, there was actually a decline in revenue receipts to Rs.
26.32 crores in FY 2003-04. This was contributed by a decrease in revenue earning of both, the Head
Office and the Narmada Project. The consolidated revenue and capital receipts of water supply
operations of IMC are highlighted in the Table 2.1.
Table 2.1 Revenue Receipts Statement of the Water Department, Indore Municipal Corporation
Revenue Receipts (Rs. in Lakhs)

2002-03 2003-04 2004-05 2005-06
S.No. Item Actual Actual Revised Projected
Estimate
Waterworks Department H.O.
1 License Fees (Plumber) 0.11 0.00 5.00 5.00
2 Miscellaneous Receipts – 0.33 0.01 0.01
3 Demand for Water Tanker 3.33 0.55 7.50 5.00
Sub-Total: Waterworks Department H.O. 3.44 0.88 12.51 10.01
Revenue Department
1 Water Charges 512.21 789.28 1100.00 1150.00
2 Water Harvesting Charge with 22.04 – – –

Building Permission
3 Application Fee for new Water Connection 0.02 0.03 0.50 0.50
4 New Water Connection Charges 180.72 151.25 150.00 160.00
5 Name Transfer Fee for Water Connection 0.00 0.13 1.00 1.00
6 Regularization of Water Connection 0.00 0.27 200.00 200.00
7 Income from Road Repair 1.35 0.88 25.00 15.00
8 Water Disconnection Charges 0.00 1.62 1.00 1.00
9 Grant from Government for solution of 10.00 – – –

Water Problem
10 Receipts from previous year 449.77 216.95 2050.00 2100
Sub-Total: Revenue Department 1176.11 1160.41 3527.50 3627.50
Tubewell Department 0.00 0.32 1.00 1.00
87
Narmada Project
1 Grant from the Government for

Maintenance of Narmada Project 203.83 131.30 350.00 400.00
2 Miscellaneous Receipts 0.29 10.00 10.00

1230.17
3 Receipts from PHED for 890.00 900.00 900.00
Salary & Allowances
4 Income from Water Charges (Narmada) 426.00 448.45 600.00 600.00
5 Revenue Receipts from previous year 40.50 0.00 425.00 425.00
Sub-Total: Narmada Project 1900.50 1470.04 2285.00 2335.00
Total Revenue Receipts:

Water Supply Operations (Rs. in Lakhs) 3080.05 2631.65 5826.01 5973.51
Total Revenue Receipts (Rs. in Crores) 30.80 26.32 58.26 59.74
Revenue Expenditure: Broadly consists of allocations made under functions such as Wages and
Salaries, Operating expenses, Repair & Maintenance (R&M) and Debt servicing. The revenue
expenditure incurred by IMC for water provision is projected to increase from Rs. 53.01 crores in
FY 2002-03 to Rs. 78.30 crores in FY 2005-06, which represents a CAGR of 13.89%. However, in actual/
audited revenue expense terms, there was a decrease to Rs. 45.27 crores in FY 2003-04. This decline
can be largely attributed to the lower expenditure on the Narmada Project (especially Division II that
monitors the project distribution system) during FY 2003-04.
Table 2.2 Revenue Expense Statement of the Water Department, Indore Municipal Corporation
Revenue Expenditure (In Rs. Lakhs)
2002-03 2003-04 2004-05 2005-06

S. No. Item
Actual Actual Revised Projected
Estimate
Waterworks Department – H.O.
1 Maintenance of Public Tap 0.92 0.00 1.00 1.00
2 Platform Construction for Tap 3.42 0.00 5.00 5.00
3 Emergency Water Problem 160.13 115.01 120.00 120.00
4 Maintenance of Overhead Tanks 41.41 0.94 2.00 2.00
5 Maintenance of Sirpur and Mundi Talaab 0.00 0.09 1.00 1.00
6 Maintenance of Ponds/Tanks 0.10 0.03 0.50 0.50
7 Chemicals – Alum 41.57 2.90 12.00 15.00
8 Chemicals – Chlorine 13.15 3.98 6.00 10.00
9 Chemicals – Bleaching & Others 13.58 0.57 3.00 3.00
10 Water Tanker Hire Charges 120.00 144.44 160.00 175.00
88
11 Identification of Recharging Acquifier Zone – 0.37 2.00 50.00
12 Water Recharging in Tubewells (Corporation) 0.00 4.95 5.00 5.00
13 Water Recharging Expenditure – Corp. Buildings 8.78 1.83 5.00 5.00
14 Water Recharging Expenditure – Gardens 8.31 3.11 8.00 15.00
15 Water Recharging Expenditure –

Government Buildings 3.33 1.78 5.00 5.00
16 Water Recharging Expenditure –

School Buildings 5.36 3.05 5.00 5.00
17 Water Recharging Expenses – Public Places 0.00 3.47 5.00 5.00
18 School Going Students: Jalood Tourding

(Food & Bus) – 0.00 10.00 2.00
19 Water Recharging Expenditure – Other Places 0.00 0.00 5.00 5.00
20 Salaries & Allowances – 428.40 317.01 347.24
21 Travelling Expenses – 0.00 0.25 0.25
22 Expenditure on Temporary Exployees

(Contract Basis) – 5.19 2.00 2.00
23 Maintenance of Typewriters/Photocopeirs – 0.03 0.15 0.50
24 Maintenance of RCC Syphon – 0.00 12.00 5.00
25 Maintenance of Boat at Crossing 0.11 0.22 4.00 2.00
28 Maintenance of Impelor 1.50 0.45 1.50 3.00
29 Maintenance of Transformer 7.27 1.23 2.00 2.00
30 Maintenance of Water Lorry 0.00 1.81 2.50 2.50
31 Construction of Bilawali Filter Plant 0.00 0.00 5.00 5.00
32 Purchase of Valves 0.00 1.20 5.00 6.00
33 Expenditure of Ashray Nidhi Grant – 46.98 10.00 50.00
34 Rent of Railway Pipeline – 0.07 0.20 0.50
35 Stationery and Printing – 0.15 3.00 3.00
36 Postage Expenditure – 0.00 0.10 0.10
37 Miscellaneous Expenditure – 3.15 5.00 5.00
38 Maintenance of Fire Fighting Equipment – 0.00 0.05 0.05
39 Expenditure on Survey and Drawing – 0.00 0.50 0.50
40 Fee for Renewal of Narmada Scheme Pumping – 0.00 0.20 0.20
41 Publicity for Water Recharging 0.26 0.96 1.00 5.00
42 Exhibition and Social Works – 1.00 1.00 1.00
43 Expenditure on Seminars and Workshops – 0.00 1.00 1.00
44 Revenue Expenditure in previous years 82.45 0.00 0.00 0.00
Sub–Total: Waterworks Department H.O. 875.73 862.24 853.96 991.34
89
Yeshwant Sagar/Dev Dharam/Bilawali
1 Gradation of Rao/Bilawali Channel – 0.00 5.00 7.00
4 Expenditure on new Temp. Employees

(Contract Basis) – 0.73 5.00 2.00
5 Maintenance of Building – 0.00 2.00 2.00
6 Maintenance of Machinery at Dev Dharam 0.74 0.00 8.00 8.00
7 Expenditure at Devdhar Filter Plant 4.05 0.12 10.00 10.00
8 Maintenance of Pumping at Yashwant Sagar 1.77 0.14 25.00 25.00
9 Maintenance of Bilawali and Limbodi Talaab 0.00 0.47 5.00 5.00
10 Maintenance of Bilawali Filter Plant 0.00 0.48 0.50 0.50
11 New Works at Dev Dharam Filter Plant 0.00 0.27 5.00 5.00
12 New Construction Work at Yeshwant Sagar 0.00 1.17 15.00 15.00
13 Purchase of Impelor 0.00 0.10 9.50 9.50
15 Miscellaneous Expenses – 0.00 1.00 1.00
16 Fee for Renewal of Licence of Foolkalaria

Pumping 0.04 0.00 0.05 0.05
17 Fee for Renewal of Licence of Devdharam

Filter Plant 0.01 0.68 0.02 0.02
Sub–Total: Yashwant Sagar/Dev Dharam/

Bilawali 143.05 4.16 218.80 213.29
Narmada Project
Narmada Project – Division I
1 Maintenace of City Main Roads – 0.00 25.00 20.00
4 Maintenance of Vehicles – 8.22 28.00 15.00
5 Maintenance of Intactwell – 0.00 5.00 5.00
6 Maintenance of Building – 1.53 18.00 15.00
7 Chemicals and Other Goods – 54.32 108.00 70.00
8 Maintenance of Transformers – 0.00 20.00 25.00
9 Maintenance of Laboratory Equiment – 0.12 6.00 2.00
10 Maintenance of Plant & Machinery Intakewell 21.59 31.13 42.00 45.00
11 Maintenance of Plant & Machinery of

Pumphouse No. 2 31.89 42.61 42.00 45.00
90
Pumphouse No. 3 30.63 23.38 42.00 45.00

Pumphouse No. 4 22.00 15.14 42.00 45.00

Pumphouse No. 5 33.84 21.42 42.00 45.00
15 Maintenance of Electrical Equipment 49.53 35.80 40.00 35.00
16 Maintenance of Water Purification Plant 36.41 18.18 18.00 25.00
17 Maintenance of Spare Parts 0.00 0.00 24.00 24.00
18 Maintenance of Pipeline of Pumphouse No.1 19.65 0.57 1.50 1.50
19 Maintenance of Telephone & Wireless 11.57 1.12 18.00 18.00
20 Maintenance of Employee Quarters – 11.89 20.00 10.00
21 Spare Parts & Consumables – 0.00 50.00 30.00
22 Maintenance of Intakewell Bridge &

Pumphouse 0.28 0.49 4.00 4.00
23 Maintenance of Retaining Wall 0.00 0.00 5.00 0.01
24 Maintenance of Clear Water Pump 0.00 0.00 40.00 60.00
25 Maintenance of Boundary Wall 0.00 0.00 9.00 5.00
26 Maintenance of Panels & Cables 0.00 0.00 16.00 10.00
27 Maintenance of Pipeline B.P. Tank 30.00 8.51 12.00 8.00
28 Spares for Raw Water Pump 35.30 51.51 110.00 75.00
29 Spares for Clear Water Pump – 0.00 0.00 40.00
30 Tools for T&P Machinery – 0.00 15.00 10.00
31 Purchase of Batteries – 0.00 6.72 9.00
32 Purchase of Valves – 0.28 20.00 10.00
33 Purchase of Capacitors – 1.70 5.00 5.00
34 Stationery & Printing – 0.00 5.00 2.00
37 Maintenance of Fire Fighting Equipment – 0.00 3.00 3.00
38 Vehicles Hire Charges – 0.00 0.00 5.00
39 Fee for Renewal of Narmada Scheme Pumping 0.15 0.00 0.30 0.30
40 Regrouping of Account Heads – 0.00 20.00 0.00
Sub–Total: Narmada Project I 894.62 746.97 1278.72 1184.81
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Narmada Project – Division II
1 Maintenance of Overhead Tanks – 79.80 60.00 75.00
2 Expenditure on Survey – 1.00 1.00 2.00
5 Maintenance of Furniture/Fixtures – 1.99 5.00 2.00
6 Maintenance of Vehicles – 11.78 18.00 15.00
7 Chemicals & Other Goods – 19.41 25.00 25.00
8 Maintenance of Transformers – 0.00 6.00 5.00
9 Maintenance of Electricity Sub–Station – 0.00 4.00 5.00
10 Maintenance of Roads – 11.68 10.00 15.00
11 Maintenance of Laboratory Equipment – 14.41 15.00 15.00
12 Emergency Repairs – 29.01 35.00 40.00
13 Maintenance of Office Equipment – 2.00 4.00 4.00
14 Maintenance of B.P.Tank – 2.95 12.00 10.00
15 Maintenance of Telephone & Wireless – 3.68 18.00 18.00
16 Maintenance of Employee Quarters – 9.93 8.00 10.00
17 Spare Parts & Consumables – 24.33 30.00 30.00
18 Maintenance of Office Building – 4.00 4.00 5.00
19 Maintenance of Store Building – 1.99 2.00 3.00
20 Maintenance of Guest House – 2.98 3.00 3.00
21 Maintenance of Rao Sumpwell – 1.45 3.00 3.00
22 Maintenance of City Distribution Pipeline – 74.84 90.00 100.00
23 Maintenance of Main Trunk Pipeline – 59.98 75.00 90.00
24 Maintenance of Small Bridges – 3.00 5.00 5.00
25 Maintenance of Main Trunk – 24.97 30.00 40.00
26 Electricity Expenses – Office – 19.07 25.00 25.00
27 Electricity Expenses – Guest House – 0.00 5.00 5.00
28 Electricity Expenses – Others – 4.91 3.00 3.00
29 Purchase of Valves – 24.79 30.00 50.00
30 Purchase of Electrical Equipments – 4.87 6.00 8.00
31 Purchase of Water Meters 0.99 0.00 2.00 10.00
32 Change of Old Pipelines 99.55 99.93 100.00 125.00
33 Interest on HUDCO loan for Overhead Tank 113.83 303.17 220.00 140.00
34 Interest on Army loan 0.00 10.64 11.00 11.00
35 Interest on loan 0.00 0.00 0.00 50.00
92
36 Interest on HUDCO loan for
New Overhead Tank 0.00 0.00 40.00 50.00
39 Telephone Expenditure – 6.24 12.00 12.00
41 Tender Release Expenditure – 2.00 5.00 5.00
42 Electricity Expenditure – 1308.00 3470.00 3400.00
43 Vehicles Hire Charges – 3.74 8.00 5.00

44 Expenditure on Seminar & Workshop – 0.00 1.00 2.00
45 Guarantee Fee – 0.00 20.00 12.00
46 Regrouping of Account Heads – 5.97 9.00 0.00
47 Revenue Expenditure in previous year 521.78 0.00 290.00 60.02
Sub–Total: Narmada Project II 3188.03 2683.48 5240.00 5011.02
Grand Total – Narmada Project 4082.65 3430.45 6518.72 6195.83
Tubewells
1 Maintenance of Wells, Cleaning & Covering 17.49 4.90 5.00 5.00
2 Maintenance of Handpump 12.21 5.98 11.00 12.00
3 Expenditure on Survey – 0.00 2.00 2.00
4 Conduction of Survey of Private Tubewells – 0.21 1.00 1.00
7 Maintenance of Furniture/Fixtures – 0.10 1.00 1.00
8 Maintenance of Tubewells 148.16 121.97 150.00 150.00
9 Maintenance of Electrical Fittings and

Open Well Pump 2.78 1.80 2.00 5.00
10 Maintenance of Fire Hydrant 0.00 4.28 5.00 5.00
11 Expenditure on Rewinding of Tubewell Pump 0.00 50.80 80.00 90.00
12 Cleaning of Tubewell Pump 0.00 36.02 90.00 80.00
13 Cleaning of Wells 0.00 4.42 10.00 6.00
Sub–Total: Tubewells 199.68 230.62 402.54 429.88
Total Revenue Expenditure – 5301.11 4527.47 7994.02 7830.34

Waterworks Department (Rs. in Lakhs)
Total Revenue Expenditure – 53.01 45.28 79.94 78.30

Waterworks Department (Rs. in Crores)
93
The amount of revenue surplus/deficit generated by a Municipal Corporation is indicative of the
Corporation’s ability to not only fund capital expenditure, but also enhance its operating efficiency.
In this context, it is imperative to track the movement of revenue account surplus/deficit of water
supply operations of IMC. The trend from FY 2002-03 to FY 2005-06 is highlighted below:
It is clear from above that the revenue expenditure of IMC’s water supply operations have been
consistently higher than its receipts, thereby resulting in a persistent revenue account deficit over
the last few years. While the deficit decreased by 14.64% in FY 2003-04, it is expected to revert to its
FY 2002-03 level in FY 2004-05. The deficit is projected to be Rs. 18.57 crore in FY 2005-06.
b. Capital Account
In the context of an Urban Local Body (ULB), the importance of having a stable stream of capital
receipts as well as their deployment towards prudent capital expenditure can hardly be undermined.
Another facet of capital account worth examining is the consistency/stability of capital expenditure
over the years as well as its proportion to the total waterworks expenditure. The trend of capital
receipts and expenditure for water operations of IMC are highlighted below:
– Capital Receipts: IMC prepared its first balance sheet in FY 1999-00. The capital receipts for water
operations of the Municipal Corporation primarily consist of grants from the Government and
loans from financial institutions, especially for the Narmada Project. The trend of capital receipts
is presented as at Table 2.3.
It can be readily observed from Table 2.3 that capital receipts are expected to show an up-trend,
primarily based on higher loans from financial institutions. This trend obviously implies a higher
interest liability for the Municipal Corporation in the future. For sake of better financial
management, the Waterworks Department needs to regularly assess not only its debt profile
with reference to the source, tenure, interest rates and repayment arrangements of major loans,
but also survey alternative financing means for capital expenditure works.
– Capital Expenditure: Capital Expenditure is primarily undertaken by ULBs to augment

infrastructure and improve quality & reliability of water supply. The level of capital expenditure
and means to finance the same are critical inputs in determination of tariffs. The proper treatment
of Capital Expenditure is exacerbated by the fact that new projects aimed at augmenting water
supply infrastructure are generally long-term and require investments spread over a number of
years. In the recent years, IMC has introduced certain level of consistency in classification of
expenses (recurring/non-recurring and capital) and in attributing them to various departments
& accounting heads. In its accounts statement, the Municipal Corporation broadly classifies capital
payments under fixed assets and loan repayments. Accordingly, the capital expenditure schedule
94
of IMC’s water supply operations have been prepared to reflect expenses both on, fixed assets for
the Head Office (H.O), Yashwant Sagar/Dev Dharam, Narmada Project and Tubewells and the loan
repayments mainly to Housing and Urban Development Corporation Ltd. (HUDCO). The trend of
capital expenditure is presented in the Table 2.4.
Table 2.3 Capital Receipts for Water Operations, Indore Municipal Corporation
Capital Receipts (In Rs. Lakhs)
2002-03 2003-04 2004-05 2005-06

S. No. Item
Actual Actual Revised Projected
Estimate
Narmada Project – Division I
1 Grant from government for Chandan Nagar
Water Tank – 0.00 0.00 60.00
2 Receipt from IDA for Chandan Nagar Water Tank – 0.00 0.00 51.00
3 Grant from government for construction of tanks – 0.00 0.00 400.00
Sub-Total 0.00 0.00 511.00
Narmada Project – Division II
1 Loan from HUDCO for Water Tank

(Old Scheme – Part II) – 284.00 200.00 0.01
2 Loan for Water Tank – Khatiwala Tank – 0.00 160.00 50.00
3 Loan for Water Tank – Sukliya – 0.00 160.00 50.00
4 Loan for Water Tank - Bada Ganpati – 0.00 100.00 100.00
5 Loan for Water Tank – Nanda Nagar – 0.00 60.00 0.01
6 Loan for Water Tank – Chandan Nagar – 0.00 85.00 130.00
7 Loan for Water Tank – Sch. No. 54/74 – 0.00 100.00 100.00
8 Loan for Water Tank – Chhatribagh – 0.00 100.00 125.00
9 Loan for other Tanks – 0.00 0.00 0.01
10 Loan received from ADB – 0.00 0.00 0.01
Sub-Total 284.00 965.00 555.04
Waterworks Department H.O.
Receipt for construction of Water Tank in colonies – 3.39 5.00 5.00
Total Capital Receipts – Waterworks & Narmada

Project (Rs. in Lakhs) 287.39 970.00 1071.04
Total Capital Receipts (Rs. in Crores) – 2.87 9.70 10.71
95
Table 2.4 Capital Expenditure for Water Operations, Indore Municipal Corporation
Capital Expenditure (Rs. in Lakhs)
S. No. Item 2002-03 2003-04 2004-05 2005-06
Fixed Assets and Loan Repayment Actual Actual Revised Projected

Estimate
Waterworks Department H.O. (Fixed Assets)
a. New Water Pipelines 447.44 162.75 200.00 150.00
b. New Pipeline at new colonies 0.00 0.00 100.00 75.00
c. Expenditure on Water Supply Pipeline

Network at zone – 0.00 0.00 345.00
d. Expenditure on Water Supply Pipeline

Work at Zone – 0.00 0.00 120.00
e. Purchase of Pumps for Clean Well – 0.00 1.00 1.00
f. Purchase of Office Equipment – 0.00 0.50 0.50
g. Expenses from MPs Fund 0.00 0.00 25.00 25.00
h. Expenses from MLA Fund 0.00 0.00 20.00 20.00
Waterworks Department H.O. 447.44 162.75 346.50 736.50
Yashwant Sagar/Dev Dhar (Fixed Assets)
a. Construction of Store Room at Devsharam – 0.00 5.00 9.00
b. Enhancement of Water Storage Capacity – 0.00 50.00 0.01
c. Puchase of Pumpset – 18.16 40.00 20.00
d. Purchase of NAV at Devdharam – 0.00 0.00 4.00
Yeshwant Sagar/Dev Dhar – 18.16 95.00 33.01
Sub-Total (Waterworks Department H.O+

Yashwant Sagar/Dev Dharam) – 180.91 441.5 769.51
Narmada Project (Fixed Assets)
Division I – 0.00 135.00 98.00
Division II – 160.89 1365.00 1717.00
Sub–Total: Narmada Project – 160.89 1500.00 1815.00
Tubewells (Fixed Assets)
a. New Tubewells & Machines 53.25 107.68 100.00 50.00
b. Purchase of G.I Pipes for new Tubewells – 0.00 0.00 40.00
c. Purchase of Pumpsets for Jansahyog Tubewell – 0.00 0.00 50.00
d. Purchase of Pumpsets 0.00 6.96 100.00 50.00
e. Purchase of Furniture – 0.11 1.00 1.00
f. Purchase of Office Equipment – 0.00 1.00 1.00
g. Expenses from MPs Fund 0.00 0.00 25.00 25.00
h. Expenses from MLA Fund 0.00 0.00 25.00 25.00
Sub-Total: Tubewells – 114.75 252.00 242.00
96
Schedule of Loan Repayment
a. Repayment of HUDCO Loan (Old Tanks) 109.83 146.44 146.50 146.50
b. Repayment of HUDCO Loan (Tanks Part 2) – 0.00 0.00 50.00
c. Repayment of Army Loan 21.86 10.64 23.00 11.00
d. Repayment of Loan – Sukhlia Water Tank – 0.00 0.00 50.00
e. Repayment of Loan – Khatiwala Water Tank – 0.00 0.00 50.00
f. Repayment of Loan – Chatribagh Water Tank – 0.00 0.00 25.00
g. Repayment of ADB Loan – 0.00 0.00 0.01
Total Loan Repayment 131.69 157.08 169.50 332.51
Total Capital Expenditure (Rs. in Lakhs) – 613.63 2193.50 2826.52
Total Capital Expenditure (Rs. in Crores) – 6.14 21.94 28.26
It can be observed from Table 2.4 that capital expenditure is projected to increase substantially from
Rs. 6.14 crores in FY 2003-04 to Rs. 28.26 crores in FY 2005-06. While the actual and the projected
figures for any local body may vary to a large extent, the above trend does indicate the positive
intention of IMC to increase its capital spending on water works.
The extent of capital receipts over expenditure reflects the level of capital account surplus. However,
a capital surplus arising solely from cutback in capital expenditure and for funding revenue deficits
is considered an imprudent financial practice. Another important parameter, which could indicate
the prudence of expenditure management at IMC, is the contribution of capital expenditure to the
total water supply expenditure.
Table 2.5 Assessment of Capital Expenditure & Capital Account Deficit
Item Head FY 2003-04 FY 2004-05 FY 2005-06
Actual Revised Projected

Estimates
Capital Expenditure (Rs. in Crores) 6.14 21.94 28.27
Capital Account Deficit (Rs. in Crores) -3.26 -12.24 -17.55
% age Contribution of Capital Expenditure to

Total Expenditure 12% 22% 27%
The Table 2.5 reflects that IMC’s increasing capital deficit on water operations is linked to its projected
increase in capital expenditure. Additionally, the contribution of capital expenditure to the total
Waterworks expenditure is also projected to increase substantially from the FY 2003-04 levels.
However, as these parameters are based on the revised/projected estimates, they may or may be
realised in actuality and hence should be viewed cautiously.
Based on the revenue and capital account performance, the annual loss levels of the Waterworks
Department are presented at Table 2.6.
It is clear from Table 2.6 that the annual loss level of IMC’s water supply operation is projected to
increase substantially over the next few years, thereby negatively impacting the Municipal
Corporation’s overall fiscal position. While the Municipal Corporation has introduced several steps
towards improving financial sustainability, measures on tariff rationalization and improvement of
97
the collection coverage, billing and enforcement need to be further hastened. However, before we
discuss these aspects in greater detail, presented below is the component-wise analysis of revenue
receipts and expenditure statement of IMC’s water operations.
Table 2.6 Annual Surplus/Loss Level of Water Operations, Indore Municipal Corporation
Item Head FY 2003-04 FY 2004-05 FY 2005-06

(Actual) (Revised Estimates) (Projected)
Revenue Account Deficit (Rs. in Crores) -18.95 -21.68 -18.57
Capital Account Deficit (Rs. in Crores) -3.26 -12.24 -17.55
Annual Surplus/Loss (Rs. in Crores) -22.21 -33.96 -36.12
2.2.1 Analysis of the Revenue Receipts Statement

As highlighted earlier, the revenue receipts of IMC’s water operations have been categorized under
various departments such as Revenue, Waterworks H.O., Narmada Project, Yashwant Sagar/Bilawali/
Dev Dharam and Tubewells. The underlying trend for each of these Departments is detailed below:
• Waterworks H.O.: Revenue accounting under Waterworks H.O primarily consists of License fee
(Plumber), Miscellaneous receipts and Demand for water tanker. While revenue from license fee
of plumbers is primarily a one-time registration fee, the demand for water tankers reflects the
charges levied for supply of water through tankers (Rs. 300/- for 600 liters, Rs. 500/- for 1400 liters
and no charge for slum area supply). On the other hand, miscellaneous receipts cover revenue
from sources such as sale of forms for tender & water registration. The revenue receipts of
Waterworks H.O. are expected to increase from Rs. 0.88 crores in FY 2003-04 to Rs. 12.51 crores in
FY 2004-05 and Rs. 10.01 crores in FY 2005-06. This increase is based on the expected increase in
revenue from water tankers. However, there seems to be no apparent reason for IMC to project
such a substantial increase in revenue receipts from the tankers.
• Revenue Department: As stated earlier, the Revenue Department was formed in the year 2002
to bring all billing & collection activities of the Municipal Corporation under one department.
Subsequently, the Department was reorganized into two new sub-departments on the basis of
its assessment and recovery functions. Efforts were simultaneously undertaken to decentralize
collections by introducing recovery counters at the zonal level as well as by forming special
property & water bill collection teams with pre-specified targets. The IMC also authorized its zonal
officers to disconnect water connection of the defaulters.
The Revenue Department primarily reports its water related receipts under three heads viz. Water
charges, new water connection charges and receipts from previous years. Revenue collection
from water charges is projected to increase from Rs. 5.12 crores in FY 2002-03 to Rs. 11.50 crores
in FY 2005-06, representing a CAGR of 30.94%. This upswing in the water charge recovery indicates
the benefits reaped on account of IMC’s improved bill collection and enforcement efforts. On the
other hand, receipts from new connections are projected to decline marginally from Rs. 1.81 crores
in FY 2002-03 to Rs. 1.60 crores in FY 2005-06. According to a FIRE-D Report, IMC is able to bill for
only two-thirds of its water supplied, the rest being illegal connections. There is therefore ample
of opportunity for legalization of existing illegal consumers, which indicates the possibility of
earning higher revenues from new connections.
98
Furthermore, as IMC follows the accrual system of accounting, it regularly reports the revenue receipts
from previous years. These receipts are projected to increase substantially from Rs. 4.50 crores in FY
2002-03 to Rs. 21.00 crores in FY 2005-06, indicating a CAGR of 67.1%. The break-up of revenue receipts
by originating source for the Revenue Department is presented below:
• Narmada Project: Of the total water supply of 189.0 million liters per day to the Indore city,
Narmada Project contributes as much as 75.0%, making it the largest source of water (Narmada
Jalpradaya Yojana, Indore). As Narmada River flows about 70 km away from the main city, this
project also services about 59 bulk consumers (including Military Headquarters at Mhow, Dewas
and several villages) along its water transmission pipeline. An analysis of revenue receipt sources
of Narmada Project reveals that a major portion (70-75%) is currently derived from administrative
grants from the Government/PHED for maintenance and staff salary. Further, about 22–30% of
the total receipts of Naramda Project are from own sources i.e. water charge levy. On an aggregate,
the revenue receipts from Narmada Project are expected to increase from Rs. 19.0 crores in
FY 2002-03 to Rs. 23.35 crores in FY 2005-06, reflecting a CAGR of 7.10%. However, in FY 2003-04,
the actual revenue from this project declined to Rs. 14.70 crores. The segregation of revenue
receipts by originating source for the Narmada Project is presented as follows:
2.2.2 Analysis of the Revenue Expenditure Statement

IMC’s Revenue Expenditure on water supply is reported under four broad heads viz. Waterworks
Department H.O., Yashwant Sagar/Dev Dharam/Bilawali Tank sources, Narmada Project (Division
I & II) and Tubewells. It is worth mentioning that as part of its accounting system reforms, the revenue
expenditure schedule was made more exhaustive to reflect even minor expense heads. The graphs
show the composition of total revenue expenditure for each of the above-mentioned heads during
FY 2002-03 & FY 2003-04, FY 2004-05 (Revised Estimates) and FY 2005-06 (Projected).
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• Waterworks H.O.: The major expense sources of Waterworks H.O. include salaries & allowance,
water tanker hire charges, expenditure on emergency water problem and maintenance of water
distribution mains. As the department-wise break-up of revenue expenses for FY 2002-03 is not
available, it is not possible to comment on the trend in actual terms. However, expenditure on
account of salaries is projected to decline from Rs. 4.28 crores in FY 2003-04 to Rs. 3.47 crores in
FY 2005-06, which is a part of the expenditure control drive initiated by the Municipal Corporation.
• Narmada Project: As with the Waterworks H.O., the major component of revenue expenses for
the Narmada Project (Division I & II) is salaries & wages to the staff (25.94% of total).This component
is entirely borne by the PHED as annual administrative grants. Other important expense
components include the purchase of chemicals, maintenance of plant, machinery, pipelines &
overhead tanks, electricity expenses and interest payment on HUDCO loan. Most importantly, the
electricity expenditure incurred by Division II is projected to register a massive increase from Rs.
13.08 crores in FY 2003-04 to Rs. 34.02 crores in FY 2005-06, which shows a CAGR of 61.22%.
However, it is not clear from the financial statements whether or not the Municipal Corporation is
paying for its electricity consumption and the amount outstanding on this account. IMC also
needs to consider pump/energy efficiency improvements, which could potentially reduce the
annual expenditure on power in the future. Our interaction with IMC officials revealed that the
Government of Madhya Pradesh is directly making payments to Madhya Pradesh State Electricity
Board (MPSEB) for a bulk of electricity consumed by the Narmada Project. Further, the IMC has
taken a Rs. 500 crore loan from the Asian Development Bank to pay for electricity charges.
• Apart from Waterworks H.O. and Narmada Project, there are two other revenue expense items
viz. Tubewells and Yaswant Sagar/Bilawali/Dev Dharam Tanks. Together, they account for 6–8% of
the total revenue expenditure of water operations of IMC. However, under both these heads, the
salary & wage expenditure is not being accounted properly.
2.2.3 Inconsistencies and Data Gaps in Financial Statements

• Expenditure on salaries & wages is not being accounted in a proper manner, especially for the
Tubewell and expense on Yashwant Sagar/Dev Dharam/Bilawali Tanks. Additionally, there exists
no separate accounting to reflect own- revenue generation and receipts from the Government
as administrative grants.
• As highlighted earlier, there are four departments within the IMC that deal in various aspects of
water supply & delivery i.e. Waterworks H.O., Revenue Department, Tubewells & Narmada Project.
While this functional demarcation enables better service orientation & delivery, it potentially shields
the proper estimation of profit/loss level solely accruing water provision. In other words, the existing
functional division hinders the financial assessment of each department as a ‘Profit Centre’.
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• No reporting is being currently done on revenues received by the Municipal Corporation from
each consumer category i.e. Domestic, Industrial, Commercial and Bulk.
• There are no clear estimates of annual collection efficiency. Municipal Corporation officials
estimate the current collection efficiency to be about 50%. However, a more accurate figure for
this measure is essential, as it would enable the Municipal Corporation to target improved
collection levels on a yearly basis.
• The Waterworks Department apparently does not have a policy on bad debts. There exists limited
recorded data on bad debts even for the past few years.
2.3 Current Water Tariff Structure & Collection Efficiency

IMC supplies water to consumers within the Corporation limits through approximately 1,46,355 water
connections. Our field visit revealed that a majority of these connections consist of un-metered
domestic water connections from which a monthly fixed charge of Rs. 60/- is being collected.
The water user charges of IMC are mentioned in its tariff schedule (effective 1997-98). The Municipal
Corporation has broadly classified its water supply consumers as follows:
1. Domestic/Residential.
2. Commercial establishments such as hotels, restaurants, beauty parlours, cinema theatres, nursing
homes etc.
3. Industry.
There exist 59 bulk consumers across all categories for whom tariff rates have been specified in
accordance to the ferrule size (i.e. diameter of supply pipe).
For all these categories, the Municipal Corporation charges a fixed service charge, levied on a quarterly
basis. This amount is determined for each category based on the ferrule size characteristics.
The existing water tariff schedule is shown at Table 2.7:
Table 2.7 Existing Tariff Schedule

Applicable Water Charges
S.No. Connection Size Residential Commercial Industrial
1 ½” 60 150 300
2 ¾” 120 300 600
3 1.0" 240 700 1200
4 1.5" 480 1200 2400
5 2.0" 960 2400 4800
6 3.0" 1920 4800 9600
7 4.0" 3840 9600 19200
8 6.0" 7680 19200 –
9 8.0" 0 0 0
10 10.0" 0 0 0
Metered Charges (Rs./Kilo Liters) Bulk
Domestic 2 10
Commercial 10.0-50.0 11
Industrial 22 22
Source: Proposed Tax, Charges, Rent and Rate Guidelines of IMC (FY 2005-06)
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Apart from charging fixed rates for water supply, the Municipal Corporation also charges for provision
of specific services such as opening new account, road cutting and legalization of connection.
The applicable rate for these services is presented below:
Table 2.8 Charges for New Water Connection
S. No. Type of Connection Charges (in Rs.)

1 1/2" 2500
2 3/4" 3750
3 1" 5000
4 1-1/2" 15000
5 2" 20000
6 3" 30000
7 4" 45000
8 6" 90000
Road Cutting Charges
3
Type of Road Charge per m
Temporary Road 40
Metal Road 75
Damar 150
Cement Concrete Road 142
Black Stone Paving 200
Red Stone Paving & Service Lane Repair 175
Hot Mix Paver 600
Table 2.9 Illegal to legal conversion charges – Domestic Connections

(in Rs.)
S. No. Connection Type Negotiation Charge Non-Refundable,

One-year extra payment
1 ½” 3220 No
2 ¾” 3750 1440
3 1" 5000 2880
4 1-1/2" 15000 5760
5 2" 18000 11520
6 3" 30000 23040
7 4" 50000 46080
8 6" 1000000 92160
9 8" – –
For people residing in Jhuggis, legalization of illegal water 1/4 of the applicable
connections water charges
In addition to above, the schedule offers concessions for water provision to backward areas, low-cost
housing, and slum areas, and to the handicapped consumers.
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Collection Efficiency
Collection Efficiency primarily indicates the percentage of the billed amount that is collected through
water charges. Based on total number of connections, the expected revenue from water charges
works out to be Rs. 11.90 crores. However, the actual amount of revenue receipts from water charges
was Rs. 5.12 crores in FY 2002-03 and Rs. 7.89 crores in FY 2003-04, indicating an overall collection
efficiency of 43.03% and 66.30% respectively. Obviously, higher collection from water charges would
increase the revenues, thereby reducing overall loss levels. Our field visit revealed that the collection
efforts were not being rigorously pursued at the Municipal Corporation end.
2.4 Key Recommendations

• Tariff Rationalization2 : Currently IMC follows a method of charging flat rates for water supply,
primarily because there is no metering at the consumer end. This methodology is inherently based
on two assumptions. These are:
– It takes approximately the same amount to service each customer, irrespective of the water
amount supplied and the time of supply.
– The Waterworks Department is able to recover all costs, irrespective of the consumption level.
As these two assumptions generally do not hold true, this methodology of charging flat tariffs for
water supply leads to inefficiencies as well as defies economic logic. A flat tariff not only encourages
indiscriminate and illegal water usage, but also acts as a disincentive for consumers to conserve
water.
An alternative to the current tariff structure is the ‘two part’ tariff structure. Such a tariff design typically
includes a consumption/ volumetric rate in addition to the fixed water charge. The former is primarily
a variable charge that recovers costs based on usage. The two-part tariff design is beneficial over
current structure as it encourages conservation, recovers costs of holding unused capacity for peak
demand and reflects tariff efficiencies for servicing various customer categories. International
literature on water tariff reform suggests that the following factors determine the structure of
two-part tariff:
• Level of metering (total, partial or no metering).

• Extent of cross-subsidization between consumer classes.
• Number of customers and disproportionate customer structures (e.g. numerous high volume
users or high proportion of small volume users).
• Fluctuations in demand patterns during different times of the year.
• Age of the system that determines the level of operating & capital cost requirements.
• Existing rules and water tariff structure.
2
Due to lack of information on category-wise annual revenue receipts & expenditure, the current analysis presents only a broad
recommendation on tariff rationalization. This is because an implementation plan requires detailed break-up of income-expenditure
items, which is lacking in the current context.
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To operationalise the two-part tariff structure, the Waterworks Department needs to develop
appropriate information and monitoring systems that collect and report the following financial details:
• Allowable costs and cost allocation procedure.

• Profit, return on investment and return on assets i.e. the Department is allowed a mark-up or
return over its economic costs.
• Tariff setting procedures.
It should also be noted that two-part tariff structures are most suited for metered systems. Field
visits by our project team have shown that currently there is only limited or no metering in the
Domestic/Residential categories.
It should be noted that any water tariff rationalization exercise should take into consideration the
following points:
• Consumer categories that are not being charged for the water supplied, for example, places of
worship need to gradually start paying for the same. If the State Government wants to provide
free water to these consumers, they need to provide subsidy to the Municipal Corporation for the
same.
• Tariff rationalization should include some collection efficiency improvement measures for e.g.
rebate/discounts on early payment and penalty of delayed payment.
• Continuation of lifeline slab for “poorest of poor” domestic consumers keeping in view their
capacity to pay.
• While the correct extent of cross subsidy is difficult to ascertain due to lack of data, our interaction
with IMC officials revealed that there certainly exists a high level of subsidy in favour of the
residential consumers. In most ULBs across India, the bulk and industrial consumers cross-subsidise
the consumption of domestic, worship places and public standpost categories. This cross subsidy
needs to be gradually reduced, as all categories should ideally pay on the basis of the service
consumed.
• Apart from adopting cost-coverage principles for tariff rationalization, two other operational
parameters need to be considered by the Municipal Corporation. These are:
a. Cost-containment: The Municipal Corporation should make all efforts to reduce operational
wastage and improve cost-effectiveness. For a piped water system, measures such as
minimizing non-revenue water (including water unaccounted for and all other water not paid
for) and maximizing efficiency of billing and collection can significantly reduce the cost
structure of Waterworks Department.
b. Liquidity-maintenance: The Municipal Corporation needs to also maintain adequate cash on

hand to meet expenses for construction, debt servicing and O&M.
• Data required for tariff rationalisation & financial assessment needs to be collected in an
unambiguous and easily interpretable manner. This would enable the Waterworks Department
to not only assess its current financial performance regularly but also undertake corrective
measures as and when required. Based on information availability, the various financial ratios
that could be reviewed by the Municipal Corporation are listed below:
a. Rate of return: Ratio of income to average net fixed assets in operation.
b. Operating ratio: Ratio of operating expenses to operating income.
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c. Current ratio: Ratio of current assets to current liabilities
d. Debt equity Ratio: Ratio of long-term debt to equity
e. Debt service Ratio: Ratio of internal cash generation to total debt service
f. Self-financing ratio: Ratio of net internal cash generation less debt service to capital expenditure.
• Prudent Financial Management & Planning: As a first step towards financial sustainability, the
Waterworks Department could tap additional revenue sources either by increasing user fees &
charges/tariff rationalization, by ensuring maximum coverage & collection or by introducing new
taxes & charges. While the IMC has already tapped external funding such as municipal bonds,
more efforts need to be made in this direction.
On the expenditure front, possibilities of savings through efficiency improvements should be

vigorously explored. In this context, adequate emphasis needs to be laid on setting & prioritisation
of various expenditure items, as well as on justifying the geographic benefit of service provision.
The Waterworks Department also needs to make provision for increases in expenditure on account
of inflation, prior service commitments and uncommitted proposals for service expansion.
Additionally, for effective planning and control of municipal expenditure, the Department could
adopt the following measures:
a. Municipal Action Plans: Action planning at the municipal level has been widely implemented
by ULBs in Brazil. This system is implemented in a phased manner i.e. from the level of strategic
objectives to a medium term financial & programme plan, to an annual work programme and
budget; and finally to a quarterly implementation plan.
b. Performance Indicators: The annual expenditure performance of Waterworks Department could

be assessed in terms of such indicators as cost-to-output ratio.
c. Quarterly Rolling Plan: Short-term quarterly plans could be implemented for ensuring
continuity and more effective expenditure planning.
• Inventory & Materials Management: Like all other ULBs, the Indore Municipal Corporation (IMC)
holds a significant amount of fixed assets. However, it has been observed that very few ULBs are
currently exploiting the real commercial benefit of these properties to generate non-tax revenues.
This is because of the following reasons:
a. Currently, ULBs do not maintain proper records of asset inventories. This obviously constrains
implementation of strategy for optimum utilization of resources and sound inventory
management principles.
b. Generally, executives in the production & purchase departments take decisions relating to
municipal inventories. However, sound inventory management requires the proactive
involvement and participation of finance officials, who would help ensure that key resources
are being efficiently monitored and controlled.
It is also necessary to devise methods to arrive at the optimum quantity of inventory based on the
average consumption pattern, lead time and economic considerations such as cost of carrying
inventory, procurement cost and stock-out cost.
Additionally, the existing tariff structure needs to be rationalized to address cost recovery principles,
incentivise metering, improve collection efficiency and provide clarity to tariff design. The existing
tariff structure in Chennai, Bangalore and Delhi are given in Annexure 2.1. The Box 2.1 gives the
experience in India in the electricity sector in this regard.
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Box 2.1 Electricity Tariff Reforms in India
One of the most important demand side management measures in infrastructure service
provision is designing an appropriate tariff structure based on cost allocation principles.
Since the early 1990s, the power sector in India has been going through a process of
reforms and restructuring. Undoubtedly, the most important problem in this sector is
irrational tariff structure. Before the setting up of Regulatory Commissions at the state
level, the tariffs were being fixed and realised by the State Electricity Boards and Electricity
Departments. However, the state governments have constantly interfered in this process
so as to provide concessional tariffs to certain sectors – mainly agriculture and domestic
consumers. These sectors are generally cross-subsidised by the commercial and industrial
sectors and also directly subsidised by the government. At the same time, the SEBs are
not adequately subsidized for this loss in revenue and they have been incurring heavy
losses. The attempt to make up these losses by raising industrial tariffs has led to increasing
migration out of the grid through the captive generation route. As a result, the financial
position had been deteriorating every year.
The Electricity Act 2003 notified in June 2003, empowers the SERC’s to specify the terms
and conditions for the determination of tariff and ensure transparency in the tariff setting
process. SERC’s have to constitute proper measures to allocate revenue requirement in
an economically efficient manner by reducing the extent of cross subsidies. This is primarily
achieved by increasing the low-tension (LT) tariff to a greater extent as compared to high-
tension (HT) tariff. The Act also provides the guidelines and the procedure to be adopted
for the purpose of tariff determination and issuing of tariff order. The draft National Tariff
Policy was introduced in March 2005. Till date, 21 states have already issued their first
tariff orders aimed at rationalizing tariffs.
A number of commissions have instituted measures to allocate revenue requirement in

an economically efficient manner by reducing the extent of cross subsidies. This has
primarily been achieved by increasing the LT tariff to a greater extent as compared to the
HT tariff. Also, a number of commissions have initiated an increase in the tariff of
agricultural consumers despite it being a highly politicized issue. However, in some states
including Andhra Pradesh and Maharashtra, the state government decided to continue
fee power to agricultural consumers and this led to huge burden on the state’s finances.
In Andhra Pradesh, there were considerable debates and discussion on the issue and it
was finally decided that the subsidy that will be provided to farmers will have to be target
properly and criteria for the same were established. There is also a movement towards
determination of tariff based on the cost of supply approach. These regulatory reforms
have in-turn resulted in a progressive reduction in the differential between average tariff
and average cost of supply, as well as a greater orientation to base tariffs on cost allocation
principles.
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3 Water demand management strategy:
Institutional and policy reforms
3.1 Introduction
To achieve the targets set out in the Madhya Pradesh Urban Water Supply and Environmental
Improvement Project (MPUWSEIP) of improved coverage and transformation to a round-the-clock
water supply system with significantly less losses (<15%), sweeping changes would be required in
the way the municipal corporations functions today. The institutional structure of the organization
needs to be geared up for promoting managerial efficiencies and ensuring a greater level of
accountability. It is thus imperative to analyze the institutional issues plaguing IMC and develop a
reforms package to address these issues. This chapter tries to analyse the current institutional and
legal framework for provision of water supply services in Indore and suggest a strategy for future
action. A SWOT (Strength, Weaknesses, Opportunities and Threat) approach has been followed to
identify critical issues for IMC. Reform strategies to gear up IMC towards better efficiency are thereafter
suggested.
3.1.1 Rationale for reforms

It has been found that official reports tend to give much greater weightage to physical and financial
progress rather than the quality, reliability and sustainability of water supply services (TERI 2002a,
IRC 2003). Reported statistics usually indicate the population covered and hide important parameters
like regularity or duration of supply, financial sustainability of the system, water security and long-
term sustainability of the source.
The urban water supply sector in India has traditionally been plagued with high levels of inefficiencies
leading to poor service delivery and a high level of losses. The sector is characterised by a low level
equilibrium (Figure 3.1) wherein the low level of service and poor accountability of the water utilities
leads to a poor willingness to pay among the consumers which on the other hand translates into a
financial crunch for the utility making any improvements including day to day O&M very difficult.
Source: Deb 2003
Figure 3.1 Key issues in urban water supply: The vicious circle
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Urban Local Bodies (ULBs) suffer from several deficiencies and are yet to respond adequately to
emerging challenges posed by the rapidly changing urban scenario. The critical issues are service
coverage and quality, per capita water supply, increasing demand for water, inequitable water supply,
deficiencies in the treatment of raw water and in the distribution system along with poor revenue
collection (Pachauri and Batra 2001). These drawbacks have in many ways resulted in the
establishment of informal “water markets” where urban poor are the main sufferers and pay more
than the affluent for the service.
The solution to water supply is often seen as capacity augmentation, rather than operating the existing
capacity more efficiently. This bias in favour of new projects is partly due to the lack of accountability
of agencies at both local and state levels and also because of inefficient management of systems
goes un-noticed (The World Bank, 1999). Over exploitation of groundwater, degraded watersheds,
lower water supply and sanitation service coverage, poor construction and operation & maintenance
can be traced to lack of monitoring and control, low tariffs and a lack of revenue to undertake
development. High Non-Revenue Water (NRW) and low water accountability result from illegal
connections, inadequate metering and meter reading and inadequate billing on one hand and from
leakage of water on the other (McIntosh 2003). According to Pachauri & Sridharan (1998), since the
low quality of service is the single biggest obstacle to the levy of reasonable user charges, efficient
operation will help improve acceptability of higher user charges.
Further over the last decade, the responsibilities and problems to be tackled by the Urban Local
Bodies (as managers and service providers) have increased manifold. The 74th CAA has led to
decentralization of powers and responsibilities to the Local Bodies. The Constitution thus envisages
urban local bodies as being totally responsible for all aspects of development, civic services, and
environment in the cities, going far beyond their traditional role. However these institutions as
mentioned earlier are still in the process of building their financial capabilities and institutional
capacities to address the issues in service delivery. It is a known fact that most municipal corporations
in India face problems related to poor financial health, sub optimal service delivery levels, inefficiencies
and a general lack of accountability.
This problem has been recognized at the national level and the tenth five-year plan aims to address
the problem, as shown in the Box 3.1.
Box 3.1 Organisational Problems on Water and Sanitation
“……the focus should not only be on the investment requirements to augment supplies
or install additional systems in sanitation and water supply. Instead, greater attention
must be paid to the critical issues of institutional restructuring, managerial improvement,
better and more equitable service to citizens who must have a greater degree of
participation.”
“Institutions dealing with water supply and sanitation have very little autonomy on
personnel and financial matters. Information systems necessary for effective management
are generally lacking”
Source: Organisational Problems: Tenth Five Year Plan document, Government of India – Chapter 6.2
The Water works department of the Indore Municipal Corporation was also found to be facing this
problem. It is thus important to implement a reform package, which would essentially aim at putting in
place a policy and institutional framework and thus addressing the root cause of inefficiencies in IMC.
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The huge investment requirements for urban infrastructure and the policy directives of the national
and state governments also make it necessary for the local bodies to reform their governance and
management structures. Annexure 3.1 details some of the reform initiatives being undertaken at
the national level, which make it imperative for ULB’s to enhance their efficiencies and ensure greater
transparency and accountability in their functioning.
3.2 Current legal and institutional framework for provision of

water supply services in Indore
Water supply services in all towns of Madhya Pradesh are provided by the Municipal corporations/
municipalities in accordance with the provisions of the Madhya Pradesh Municipal Corporation Act
1956 and the Madhya Pradesh Municipalities Act, 1961. The acts govern the functioning of all ULB’s,
defining their powers and responsibilities. The composition of the Indore Municipal Corporation has
been fully ensured as per the provisions of the Act. The State government has also nominated persons
having special knowledge and experience in the municipal affairs recently. Wards committees/ Zonal
Committees have also been constituted by Indore Municipal Corporation as a step towards a
decentralized approach. Indore Municipal Corporation has been established according to the
provisions of the Madhya Pradesh Municipal Corporation Act, 1956.
As per the act, IMC is mandated with provision of water supply services in Indore city and collecting
charges/taxes for the same. It is vested with powers to source, treat and distribute drinking water
supply in all areas of Indore city.
The specific responsibilities of water works department of IMC are:
• Complete arrangement including operations and maintenance for water source, operation and
maintenance of Intake wells, Filter plants, Storage and supply system.
• Operation, maintenance and replacement of main and distribution pipelines.
• Maintenance of public standposts.
• Arrangement for water and supplying it through tankers or other available means at times of
shortage.
• Registration of private tap connection and its maintenance.
• Maintenance of Nagar Nigam’s private and public water sources, ponds, wells etc.
• Construction and maintenance of drains and sewers including its cleansing.
3.2.1 Institutional Arrangement: IMC

In accordance with the 74th CAA the Indore Municipal Corporation comprises of an elected body
supported by the administrative machinery. The elected wing consists of a Mayor and 69 elected
councillors (one from each ward). A Mayor-in-Council is also in place according to the provisions of
the MP Municipal Corporation Act, 1956 that constitutes of the Mayor and 10 council members chosen
from the elected councillors.
The Urban Administration and Development department (UADD) is the nodal department at the
state level responsible for providing urban services in all cities and towns. The UADD allocates funds
and provides policy directives for provision of urban service. In addition the PHED (Public Health
Engineering Department) is mandated with the responsibility of design and execution of water supply
109
and sewerage schemes, which are to be handed over to ULB’s for operation and maintenance.
Figure 3.2 gives the institutional arrangements for delivery of water supply services.
Figure 3.2 Institutional arrangements in Madhya Pradesh for provision of urban water supply
3.2.2 Composition of Indore Municipal Corporation
Elected representatives
The IMC comprises a body of elected representatives called the Council. Since each ward elects one
person to the council and Indore is divided into 69 wards, the Council of Indore comprises of 69
members. The Mayor is the chairperson of the council and is elected through direct elections by the
citizens of the Municipal Area. A 10 member Mayor-in- Council is also constituted by the Mayor from
the members of the Council.
Figure 3.3 Institutional structure of Indore Municipal Corporation
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3.2.3 IMC Staff: Water Works Department
The commissioner is the overall in-charge of the water supply operations in Indore Municipal
Corporation. The Water Works Department of the Indore Municipal Corporation is headed by a
Superintending Engineer on deputation from Public Health Engineering Department (PHED).
He is supported by two Executive Engineers handling independently the two Maintenance Divisions
of Mandeleshwar and Indore. Each Executive Engineer is assisted by Sub Engineers responsible for
the various sub-divisions within the jurisdiction of the Municipal Corporation. Figure 3.4 gives the
institutional structure of the water works department.
The total manpower in the water works department of IMC as per records is 747. In addition, staff
from PHED is also deputed for maintenance of bulk supply lines.
Figure 3.4 Organisational chart for Narmada Water Project, IMC
Indradoot Cell
Indore Municipal Corporation has led the way in establishing an “Indradoot” cell to monitor and
coordinate all matters related to water supply including complaints, redressal of their complaints,
regularization of illegal connections, launching all drives related to water conservation, public
awareness, revenue recovery drive etc. The cell has an interface with Municipal Head quarters, all
zonal offices, all OHT’s distribution zones for regular communication. It has two dedicated telephone
lines and an internet connection.
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All types of complaints related to water tax, short water supply, polluted water supply, etc are recorded
and action is taken to address them within a prescribed time period. Similarly, all drives for collection
of old water tax, survey of leakage detection, search of illegal connections, awareness campaign and
all miscellaneous activities are conducted from this office. In addition, this cell also arranges for quality
analysis of water samples on consumer request and also monitors the water quality in the distribution
system.
A format has been developed to register complaints and proper records are maintained for complaints
registered and the actions taken on these complaints.
Efforts are also underway to monitor water leakage and pilferages in different zones. This effort is
limited due to the non-metering of connections in the distribution system. However, regular physical
monitoring is done by the field staff. A record is also maintained for break downs in major infrastructure
such as non supply of electricity, bursting of pumping and gravity mains, leakage from major valves
etc. To avoid major break downs, the status of these are kept constantly under surveillance and
sufficient inventory is maintained to undertake repairs in minimum possible time. (Source: Report
on ‘Impact assessment study of Indore water supply scheme’).
The creation of this cell is an effort to be lauded. The function of the cell should be expanded from
surveillance of major infrastructure to keeping a check on the whole system. It is thus proposed to
first enhance the leak detection facilities of the water department, and then to delegate manpower,
which looks after only the leak detection, and leak repairing functions.
As the scope and popularity of this cell widens, it is possible at a later stage that the cell may not be
able to manage all the functions it is presently carrying out. At such time it may be considered to
split this cell to perform specialized functions. Outsourcing certain functions to a private player till
further capacities of the IMC are built can also be considered.
3.2.4 Key institutional issues concerning water supply operations in IMC

As is the case with most cities in Madhya Pradesh, IMC is also plagued with issues concerning
inefficiencies in service delivery and low consumer satisfaction. Moreover the existing legal and
regulatory framework does not allow the corporation to work on commercial principles. It is thus
essential to identify the root cause of inefficiencies in terms of the institutional issues and develop
a strategy to address the same. It is also a good approach for transition to a commercial orientation
of IMC.
3.3 Introduction to SWOT

A SWOT approach is used for identifying the critical issues facing IMC in both the short term and the
long term. This section aims at introducing the SWOT concept and identifying the key issues.
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. The SWOT analysis is an
extremely useful tool for understanding and decision-making for all sorts of situations in business
and organizations.
The SWOT analysis approach seeks to address the concept of strategy formulation from a two fold
perspective: from an external appraisal (threats and opportunities in an environment and an internal
appraisal (of strengths and weaknesses within the organization). The SWOT analysis template is
normally presented as a grid shown in Table 3.1.
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Table 3.1 SWOT framework
A strength: resource or capacity A weakness: a limitation, fault or defect in the use can
effectively organization organization that will keep it from achieving
its objectives
An opportunity: any favourable situation A threat: any unfavourable situation in the organizations
organizations environment in the environment that is potentially damaging
to its strategy
Due to its many advantages, it is proposed to use it for the purpose of strategy formulation for Indore.
A detailed SWOT Analysis has been undertaken at the stakeholder’s consultations. The major issues
of concern have been identified to guide the discussion and brainstorming for the SWOT analysis.
3.3.1 Key Issues

Key issues have been identified under various broad headings, which require immediate attention.
Lack of policy guidelines for service delivery

Currently water supply services in Indore are provided as per provision of the Madhya Pradesh
Municipal Corporation Act, 1956. However there is a lack of policy directive from the state government/
municipal government to promote managerial efficiencies and customer orientation. This further
leads to a fragmented approach wherein water supply schemes are designed on an adhoc basis
rather than taking a holistic approach for ensuring long term water supply to the city.
Legal framework
As per various previous studies, at present there are inconsistencies in the various laws governing
urban planning e.g. municipal law, town and country planning law, district-planning law etc. Further
the byelaws for provision of water supply need a thorough revision with clear guidelines on cost
recovery and empowering IMC to take punitive action against defaulters.
Organisational structure
There is no clarity on roles and responsibilities on the elected representatives and the reporting
relationship between staff and elected representatives.
• The powers of Mayor, Mayor-in-Council and the local body are not defined adequately.
• Further the current institutional structure of the IMC as discussed before includes mainly engineers.
All operational and management works, the responsibility of which lies with the Municipal
Corporation is done by engineers on deputation from PHED to the IMC. This arrangement needs
to be clearly defined in terms of power, roles and responsibility, reporting etc.
• Within the Municipal Corporation itself, there is a clear lack of interdepartmental coordination.
• Overall there is lack of accountability and transparency.
• There is also a complete lack of civil society in the planning and implementation of programs.
• The current institutional structure makes it practically impossible to have customer orientation
and improved efficiencies. It is thus imperative to review the existing framework with an objective
of having specialised cells for customer grievances, GIS, MIS etc.
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Internal Management
One of the weaknesses of the IMC is improper internal procedures and information management
including financial management. Further the Planning capacity, human resource development and
financial management functions are not adequately developed, as a result of which these are
operating inefficiently. Some of the key issues of concerns are:
1. Operational Aspects
• There is a lack of information on consumption of water in the city, the length of the distribution
network, pressure in the pipelines etc. This is due to the fact that all connections (Domestic/
Commercial/Institutional) are unmetered and the available information on the production
and supply of water in the city is improperly recorded.
• The available data also is conflicting in nature and constitutes mainly of poorly recorded
estimates, which could prove to be a major hindrance in the efficient planning and management
of the department. The data is also inadequate to enable a good financial assessment.
• Either maps are not available or available as a sketch. This kind of information is highly
inadequate for carrying out GIS mapping or further planning work in this sector.
2. Financial Aspects
The financial data is poorly recorded. Only single digit accounting system for recording of financial
information is used which does not clearly indicate the existing situation. Also, there is no
monitoring and accounting of the funds allocated/ grants received and their usage. Transfer of
funds from one project to the others is a common practice thus making the situation even more
chaotic.
3. Infrastructure
• A large amount of the existing infrastructure for the operations and management of water
supply is either out-lived or poorly maintained. Further there is a urgent need to modernize
the infrastructure specially for data recording and transmission. There is also no policy in place
for ensuring regular upgradation or replacement of old and out-dated infrastructure.
• Modernization and upgrading of systems and procedures in city management through

equipment, skill-enhancement and application, and updating of manuals and codes (e.g. GIS
and MIS) have not been carried out to meet the current and emerging challenges.
4. Staff Capability/Motivation
• The Municipal Corporation itself lacks in technical expertise and the engineering staff of the
Municipal Corporation who are on deputation from the PHED also face similar constraints.
• Besides, most of the work force of the municipal corporation were found woefully unaware/
lacking in modern skills for water management. Further the staff lacks basic public interaction,
financial management and social skills.
• Based on limited interaction with the municipal employees it can be inferred that the motivation
levels and job satisfaction is very low due to the following reasons:
– The poor working condition and multiple pressures from community, department and
politicians.
– There are no incentives for the employees to perform.
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– Political intervention in the IMC also reduces the motivation and performance of the
employees.
– Employees of PHED on deputation to IMC lack a sense of belongingness as they are

estranged from the PHED and IMC treats them as outsiders being paid for by PHED.
This eventually results in low motivation for performing their duties.
Public Participation/ Consumer Interface
• One of the major issues facing IMC right now is to improve its civil society interface and emerge
as a responsible customer oriented organization.
• Indore Municipal Corporation has done a commendable job in formulating a citizen’s charter.
The existing citizen charter for water supply clearly outlines the rules and conditions to be followed
by the water supply department, defines the procedure for obtaining a new water connection
and provides a detailed listing of the water charges applicable within the Municipal Corporation.
Besides, it also enables a consumer to see his/her bill online and provides guidelines on how and
where to pay the bill. The charter also provides contact information of officers to be contacted for
specific grievances.
• No RWAs or NGOs working in the sector of public water supply. There is a pronounced lack of role
of the civil society and the urban poor in policy formulation, decision making and implementation
of civic plans as the Municipal Corporation has never encouraged the participation of the public
in these.
• Water is still considered as a social good and not an economic good. There is a lack of awareness
about the economic costs of water. This can be attributed to low awareness among the citizens
regarding the costs involved in delivery of water services.
• There is a major communication gap between the IMC and the consumers. The public has a poor
image of Indore Municipal Corporation due to poor service delivery. This has increased the misery
of the consumers since Municipal water is the only available source of drinking water. This is
reported to be reduced with the implementation of the Over Head Tanks Project.
• Previous studies indicate that there is a general willingness to pay for improved water supply
mainly as no alternative dependable and safe source of water are available and the consumers
have to depend on the Municipal supplies to meet their demand.
3.3.2 Results from SWOT analysis

The key issues that emerged from the exercise on SWOT analysis are listed in Table 3.2.
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Table 3.2 Results of the SWOT analysis
Strengths Weaknesses Opportunities Threats
Institutional and Governance
– Good relations – Un-metered water – Cooperation of – Varying political

between political, supply and political members situations and political
interference at
administrative and wastages corporate level for
– Financial powers are
technical staff technical discussions
– Lack of resources vested in local
– Responsive public rationalization authorities as a – Frequent change in
policies
result of
– Outdated water – Non-awareness
decentralization
supply bye-laws among public
resulting in fast regarding water use
finalization of – Unauthorized
policies, fast connections
decision making – Public attitude to
defer payments
– Multiple agencies in
water supply
arrangements
– Illegal connections
– Instability of key post
holders
Financial
– Double entry system – Low revenue – Reforms have helped – Low revenue
in accounting realization of IMC in financial realization from
arrangements public
– Camps for collecting – Insufficient funds
– Availability of funds
revenue for improving by ADB Project;
system from Sanctioned third
Government/IMC phase (UWSEP) water
supply scheme for
augmentation
Technical
– Adequately trained – Inadequate – Up gradation of – No Master plan

manpower pressure in supply water resources
under JNNURM
– Non-availability of
– Financial powers are
distribution system
vested in local
map authorities as a result
– Frequent leakages of decentralization
due to old pipes resulting in fast
finalization of
policies, fast decision
making
Information Systems
Computerized No infrastructure for Presence of

billing system generating operational UN-HABITAT and ADB
developed by IMC information such as flow focusing on reforms
recently and pressure records
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3.3.3 Recommendations for policy and institutional reforms
Based on the critical issues identified in sections above it is proposed to initiate a comprehensive
reform programme for management of water supply to Indore city. The proposed strategies also aim
to facilitate the implementation of the Water Demand Management Strategies proposed in the earlier
chapters. Short, medium and long-term implementation goals for each of the strategies have been
identified to ease the load on the Municipal Corporation for their implementation and also to provide
the Municipal Corporation with measurable targets.
The key underlying principles that have been adopted while formulation of the strategies are:
• Promoting a commercial incentive based environment for water supply, based on cost recovery
principles while ensuing services to the poor.
• Greater public participation and involvement of public in managing water supply systems.
• Enhanced capacities of the Municipal Corporation to manage the reform programme.
• Reorientation of the utility to have a customer focus facilitating improvements in service delivery.
To achieve the above objective, following reform strategies are proposed.
3.4 Formulation of a vision and policy for provision of water supply services
To achieve the objectives it is recommended that IMC sets out a vision for itself, which should
incorporate the principles stated above, and act as a guiding document for the water utility. As of
now there is no policy or vision document for provision of water supply services to Indore. As a first
step it is thus recommended that a vision be developed for provision of water supply services by
involving all stakeholders such as IMC employees, NGO’s, academia, RWA’s etc. The vision statement
should draw upon the existing national and state water polices and urban development plans
adopted by the state and national governments and also the expectations of the consumers.
The policy should address issues such as consumer awareness, up gradation of infrastructure, reducing
losses/NRW, cost recovery and financial sustainability of operations, improved service delivery and
customer satisfaction.
3.4.1 Defining a water services policy and vision for IMC

The present project is instrumental in identifying some of the key issues plaguing the Indore Municipal
Corporation. On the basis of this analysis it is proposed that a brainstorming session be conducted
to develop a vision for water supply in the city. It is important to involve the stakeholders in the
process right from the start.
The current citizen charter of IMC and especially for the water works department is sufficiently
elaborate although it can be further strengthened to provide more information about the functioning
of the Municipal Corporation which would eventually result in greater transparency in procedures.
The charter should also include the vision for Indore Municipal Corporation.
3.4.2 Master plan for water supply

On the basis of the vision document IMC should develop a master plan for provision of water supply
services in Indore. It may also draw-up annual plans and short-term plans for a period of five years
focusing the areas identified in the policy that need immediate attention. It is important to understand
here that such plans are instrumental in the implementation of the water policy and thus should
have clearly defined targets. The plans should also outline the approach that should be used for
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achieving these targets, the possible constraints as well as suggest methods to overcome these
constraints. It would be highly beneficial in the implementation and monitoring of the annual plans
if it incorporates an activity schedule on a time scale.
3.5 Performance Measurement (PM)

Though water supply projects are designed as per the government norms there are hardly any
performance targets that the municipal corporation adheres to. Further, there is no assessment of
the service delivery levels and conformity to norms. There is thus no obligation of the municipal
corporation to check if the service levels are achieved on a continuous basis. To achieve the desired
efficiency levels, it is thus critical to define operational targets for both physical and financial
performance. Performance measurement is a starting point for any such initiative. A properly designed
PM system, in conjunction with a supporting MIS (Management Information System), can go a long
way in improving the efficiency and effectiveness of the IMC. A simple truth about PM is: ‘what gets
measured gets done’.
Performance Measurement is a practice that many organizations adopt in order to achieve higher
levels of efficiency and greater effectiveness in their operations. It also serves as a tool for strategic
decision-making and long-range planning. With increasing pressure on urban local bodies to improve
their performance in the provision of civic services, there is a great need to integrate modern
management practices into public systems, drawing from the corporate sector. In the context of
urban local bodies, PM can be defined as the process of determining how efficiently and effectively
the concerned agencies are delivering the services. It provides an assessment of the quality of work
the local body is doing and how successful it has been in satisfying community needs and
expectations. The most important reasons for measuring performance in urban local bodies are:
– Rationalizing decision-making
– Strengthening accountability
– Greater transparency in the organization
PMS can also assist in the performance appraisal of employees by providing the basis for decisions
regarding annual salary increments and promotions or even punitive action against employees whose
performance is unsatisfactory. This, in turn, would lead to better governance.
The key elements of a PMS are a PM (performance measurement) framework, a set of performance
indicators, a supporting MIS (management information system), and a strategy for performance
benchmarking.
3.5.1 Performance measurement framework

Performance measures indicate how much or how well the Corporation is doing. An I-O-E-O framework
(Input-Output-Efficiency-Outcome) can be used to measure the performance of a utility against four
types of performance measures.
• Input measures indicate the amount of resources used. These indicate the level of effort but are
strictly not a measure of performance.
• Output measures indicate the level of services provided or amount of work done. These measure
performance in terms of how much, not how well or how efficiently.
• Efficiency measures relate outputs to inputs, or work performed to the resources required to
perform it. These indicators are central to PM, but they do not measure the results achieved.
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• Outcome measures indicate the degree to which programme objectives are achieved and measure
the value of service from the perspective of the end-user.
3.5.2 Performance Indicators

In practice, measuring performance is a complex exercise because, for each selected measure, there
should be a practical measurement strategy – an indicator that captures the concept to be measured
and is easy to operationalize with the available information. Table 3.3 below gives an example of I-O-
E-O indicators.
Table 3.3 Examples of the four types of performance indicators applied to

urban water supply service
Type of Measure Water Supply Service
Input Installed capacity of water filtration and treatment plants
Output Average daily clear water production
Efficiency Total staff per 1000 connections
Outcome Percentage of population receiving adequate supply
3.6 Management Information system

It has been observed in the Indore Municipal Corporation that important information is usually
scattered, non-standardized, and improperly reported. An MIS (management information system)
can help public managers achieve greater efficiency and effectiveness, especially when there are
resource constraints. It is a tool that can be useful in making all types of decisions – at the operational,
strategic, and policy levels.
One of the most critical bottlenecks in implementing the water demand management strategy is
the lack of information/ unavailability of authentic information even with the middle/junior
management level. Thus it is recommended that as a first step to the reform process IMC should
develop a comprehensive MIS that covers all aspects of water management.
An MIS is basically a system for recording and reporting information in a way that promotes efficiency
and effectiveness, and facilitates long-term planning and decision-making. Hence, information has
to be presented in such a manner that is useful for decision-making instead of remaining just as
data, which may not serve the management’s needs. Box 3.2 shows an effort in this direction made
by the Bangalore Water Supply and Sewerage Board (BWSSB).
Box 3.2 Bangalore Information System On Networks (BISON)

Bangalore Water Supply and Sewerage Board (BWSSB) has recently completed the
development of a Geographic Information System (GIS) and computerization of water supply
and sewerage networks for 100 sq.km. of its service area in Bangalore. The project was
implemented with a funding of 7.8 million Francs from the Government of France.
The consultancy services for the Project were provided by SCE (Nantes, France) and IRAM consult
(New Delhi, India). After the successful completion of the Phase-1 of the GIS development for
the 100 sq.km. pilot zone, the Project has been extended, with additional French assistance of
5 million francs, to cover the full BWSSB service area of 300 sq.km. in Bangalore. BWSSB plans
to ultimately implement a GIS based system for about 600 sq.km. covering the total Bangalore
Metropolitan area and some other areas.
Source: Change Management Times, September 2003 by Abdullah Khan, President, IRAM Consult Intl. Pvt Ltd.,
New Delhi
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An MIS can thus help the municipal corporation to achieve greater efficiency and effectiveness,
especially when there are resource constraints. The approach to develop a structured MIS is presented
here. The key features of the approach are:
• Information collection and compilation: Data is captured at the operational level viz. Accounts,
Finance, Field Units, site offices, etc. in standardized formats. Thus, it constitutes a major part of
the short-term strategy proposed for IMC. A key part of the process is to identify the right kind of
information required at each level and then develop indicators to capture the required information.
• Information Technology (IT) infrastructure – It forms the backbone of the system and facilitates
timely and accurate collection/compilation and analysis of data.
• Performance Measurement: At the middle level and top level, the information is validated, reviewed
and corrective action initiated. Performance measurement is undertaken at this level to optimally
judge the performance of the Municipal Corporation and its employees.
Short and medium term strategy

As a first step to establishment of a computerized information management system in IMC, it is
imperative to undertake a detailed assessment of information requirements for decision-making
process. This may be compiled in the form of performance indicators to be used at all levels. Formats
for collecting the relevant information to feed into the indicator framework may subsequently be
developed along with the frequency of reporting.
Efforts have been made by the Indore Municipal Corporation to tap information related to complaints
and their redressal. To this effect, a complaint registering format has also been developed which
adequately captures information for an effective and efficient decision making process. Proper records
are maintained on breakdowns of important infrastructure such as non supply of electricity, bursting
of pumping and gravity mains, leakages from major valves etc. This effort could be extended for
other areas as well to prepare a comprehensive Information System.
The information thus collected may broadly be divided into three sets as indicated in the strategy
for developing a GIS database:
1. Asset database
2. Operational data
3. Consumer data
Long term interventions

All departments of IMC should be technologically linked (LAN, WAN etc.) so that communication
and flow of information is instant and smooth. All the information can be added in the GIS database
in due course. Such exercise shall also help IMC to make an analysis of its performance compared to
the targets set by it using national and international benchmarks.
Operationalizing performance measurement

Operationalizing a performance measurement system would essentially involve developing a set of
performance indicators to initiate the benchmarking process, developing an MIS to collect the right
information and start using the information generated to take corrective action for improving the
performance of the utility in both physical and financial terms. Figure 3.5 below gives a broad outline
of procedure for operationalizing a PM system.
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A TERI publication on “Benchmarking Performance: A manual on performance measurement in urban
local bodies” is available and acts a detailed guide for setting up a performance measurement system
for any ULB.
Figure 3.5 Implementing PM system
3.7 Capacity building

To effectively implement a comprehensive and integrated water supply reform programme there is
a need to build the capacities among the staff of the municipal corporation on the latest tools and
approaches to managing a water supply utility in an efficient manner. There is severe need to build
capacities of the staff and the officials on key concepts of the WDM strategy, policy, and institutional
frameworks to cover issues related to demand forecasting, auditing, commercial management
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practices etc. A continuous process of training the professionals on diverse issues is required. This
will not only improve their skill set but also motivate the staff.
Some of the specific aspects on which the municipal staff would need training are project formulation
and appraisals, financial management, social aspects, GIS, MIS and modern tools for water
management such as network modelling, leak detection and SCADA systems. In addition almost the
entire staff (supervisory and managerial) needs to be trained on the use of Information technology.
Box 3.3 highlights the human resource development efforts undertaken at the Chennai Metro-water
which may be used as an example for IMC.
Box 3.3 Human Resource Development, Chennai
Chennai Metro water as a part of Human Resource Development has established a full-fledged
staff-training centre as early as 1979 to cater to the growing needs of all categories of employees.
Metro water Training Centre has been imparting training to its staff covering all the categories
including field workers. For about two decades the orientation was mainly in the direction of
improving the operational practices. A reorientation towards managerial aspects was
considered necessary and accordingly the staff training activities were restructured.
In-House Training Programme for Metro Water Staff

Employees including technical, administrative, finance and field workers are trained in courses
related to Finance, Commerce, Administration, Engineering and Operation. Twenty-eight
modules in two categories Technical and Management are offered. New topics such as leakage
control, water conservation, water quality, human resource development, project management
and financial management have been introduced. Special courses are also offered in
Introduction to computers, Implementation of Official Language to familiarise the staff in
preparing drafts and letters in Tamil, wireless operations, Proper Maintenance of Files and
Records, Contract procedures and Transparency Act, Activity Based Accounts and Budgeting,
Training Program for other Institutions

Exclusive courses are also conducted based on request from various institutions. Training
programmed for Science students of Women Christian College, Chennai was conducted in
“Water and Sewerage Treatment and Analysis”.An “Orientation Course on Execution of Sewerage
works” for TWAD Board Engineers and. Tamil Nadu Urban Development Project sponsored
Orientation Course For Municipal Engineers was designed and conducted for 249 Municipal
Engineers. Government of India (CPHEEO) sponsored refresher courses are conducted every
year. Awareness programmes on Rain Water Harvesting are conducted for board staff, NGO’s
and general public.
The board officers are deputed to attend seminars and training programmes conducted by
other organisations in India and abroad. Employees are also encouraged to pursue graduate
or postgraduate programmes. As a part of the human resource development, department
tests, appreciation and awards, are also extended to achieve increased productivity and
efficiency for organisational success. The participants of other public utilities from all over
India are participating and getting trained from the level of Assistant / Junior Engineer to
Superintending Engineer cadre in these courses.
The topics covered in Metro Water Training Centre are:
1. Sewage Works Supervisors; 2. Care and use of Chlorinators; 3. Corrosion Control;
4. Filter Operations; and 5. Laying of Water mains and Sewer mains.
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3.7.1 Implementation plan
Short term
In light of the above and the skill enhancement, it is recommended that a structured approach be
developed for capacity building. A separate training cell needs to be created to look into the training
needs for the entire water works department of the municipal corporation. The training cell would
identify the specific training needs of all employees and develop a training calendar for a year.
Specifically targeted training programmes may then be conducted using both internal and external
resources. A feedback and evaluation system must also be instituted to monitor the effectiveness of
the training programmes.
To enhance the current skill set of functionaries and to enable them perform the envisaged tasks
more efficiently, the following measures are recommended:
Figure 3.6 Capacity building framework
1. It is recommended that for the purpose of training, the entire staff may be divided into three
categories:
• Operating level: Beldars, foreman, lineman etc.

• Supervisory level: Junior Engineers
• Managerial level: Assistant Engineers and above who have overall responsibility for
management within their zones.
2. Following training modules are proposed as part of the capacity building programme:
• Technical
• Financial management
• IT (Information Technology)
• Environment
• Social
• Customer services
• General
A combination of various training tools such as classrooms, case studies, hands on training and cross
visits may be employed for each course. The training cell should also work out the training
methodology for each program while designing the courses. Specific courses under each module
are given in Table 3.4.
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Table 3.4 Training Modules
Level Operating level Supervisory level Managerial level

Module
Policy and Institutional – Policy and institutional

frameworks for delivery of
WATSAN services including
various forms of PPPs
– Principles of financial
management including
tariff restructuring
– Project formulation and
appraisal
Technical – O&M of WTPs and – Overview of water supply – Overview of water supply
distribution network – Basics of design operations
– Leakage detection and – Basics of equipment O&M – Importance/concepts of WDM
control – Water balance estimation – Tendering for technical works
– Record keeping and auditing – Preparation of DPRs (project
– Metering – Materials management formulation and appraisal)
– Project planning and control
(Use of PERT/CPM)
Financial management – NA – Basics of financial – Basics of financial management

management – Accounting system
– Accounting systems – Budgeting
– Procurement – Principles of tariff restructuring
IT (Information – Basics of computers – Basics of computers – Basics of computers

Technology) (wherever applicable) – MS-Office – MS-Office
– Database management – Database management
including GIS
– Modeling tools for distribution
optimisation and demand
assessment
– Management information
systems
Environmental – Environmental issues – Environmental issues – Environmental issues related to

management related to water supply related to water supply water supply
– Basic course in – Basic course in environmental
environmental assessment assessment
– Techniques/tools for
environmental assessment
Social – Social issues related to – Social issues related to – Social issues related to water
water supply water supply supply
– Rehabilitation of PAP
– Techniques for social
assessment
Customer services – Basics of public – Grievance redressal – Grievance redressal system

dealings system – Basics of public dealings
– Basics of public dealings
General – Safety procedures – Safety procedures – Safety procedures

– Rules/regulations – Rules/regulations – Rules/regulations governing
governing JMC governing JMC IMC
– Time management – Time management
– Human resources
management
– Basics of water resource
management and issues
facing water sector in India
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3.8 Regularisation of illegal connections
Non-revenue water in Indore has been estimated to be around 60%. A major part of the non-physical
losses are attributed to pilferage/presence of illegal connections across the city. Illegal connections
not only result in a loss of revenue to the municipal corporation but also lead to wastage of water, as
these consumers do not value the water they use. Further, illegal withdrawal of water is against the
basic principles of law and equity. Thus, a strategy for reducing the number of illegal connections
needs to be formulated and adopted.
The Nagpur Municipal Corporation has adopted a pragmatic approach to the regularization of illegal
connections and a similar approach may be tried for Indore (refer Box 3.4). As part of its efforts to
reduce revenue loss, the Bangalore Water Supply and Sewerage Board “regularized’’ 35,000
unauthorized water connections during the past six years and replaced 1.35 lakh outdated or
malfunctioning domestic water meters (refer Box 3.5). (www.hinduonnet.com)
3.8.1 Implementation plan

Short term
It is generally not practical to simply disconnect illegal connections and therefore, it is recommended
that such connections be legalised by charging a nominal fee. Strategy for reduction in illegal
withdrawal would essentially involve development of a policy for regularisation of illegal connections
and a strict enforcement of the same. The strategy should aim at regularising maximum number of
illegal connections through a simple administrative procedure. A step-by-step approach to
regularisation of illegal connections is discussed below:
• Identification of illegal connections: The first step would be to identify and record information on
the number of illegal connections, their location and population/households served. A detailed
survey may be commissioned for this purpose. One approach could be to outsource this activity
to the local plumbers on an incentive based approach. These plumbers would be more aware of
the location of such connections. These local plumbers can also convince people about the need
for regularization and the scheme offered by IMC.
• Awareness campaign: An awareness campaign must precede any such initiative, which should
include the use of both PLA (Participatory learning appraisals) tools and mass media to create
awareness among the consumers about the problems stemming from illegal withdrawal of water.
The awareness campaign must also involve the local councillors and the RWAs. Incentives, in the
form of financial awards and recognition, may be instituted for wards with no illegal connections.
This shall encourage the councillors to play an active role in the regularization drive.
• Provision of adequate and safe dirking water: In most cases the community resorts to illegal
connections when adequate water supply is not available. It should thus be ensured that all areas
with major concentration of illegal connections are provided with adequate water supply through
augmentation of the network.
• Regularization of connections: Detailed formats and guidelines should be developed, discussed
and disseminated before a regularisation drive is initiated. Connections may be regularised by
paying a nominal fees, which may be same, or 1.5 times the charges for a new connection. It is
very important that all necessary information is provided to the public regarding the regularisation
policy and the procedures should be simple so as to encourage people to regularise connections.
• Setting date for regularization of illegal connections: The entire regularization should be within a
specified time frame. After lapse of this date, a strict enforcement campaign should be launched
to disconnect all illegal connections or regularize them only after a penalty fees is deposited.
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Medium term
In the medium term, a strict enforcement on part of IMC is a must. The users should realize the
economic cost of water and start developing a habit to pay for the water consumed by them. The
municipal corporation needs to take punitive actions for those indulging in any kind of water theft,
on lines similar to the electricity sector. Lessons may be drawn from the electricity sector in this
aspect.
3.8.2 Obstacles
Political support and community awareness are key to success of any such drive. Further simple
procedures and transparency would ensure that more people come forward for regularization of
connections.
Box 3.4 Reducing Unaccounted-for Water: Strategy adopted by

Nagpur Municipal Corporation
In early 2001, the water supply situation in Nagpur city was far from satisfactory.
NMC(Nagpur Municipal Corporation) was concerned about a very large number of illegal
(unauthorized) connections that resulted in substantial loss of revenue to the corporation.
Although all water connections in Nagpur city were required to be metered, it was
estimated that there were nearly 35000 un-authorized water connections in Nagpur city
at that time.
In order to improve the revenue situation NMC declared a time bound scheme for
regularization of all illegal water connections in the city. To implement the scheme NMC
adopted a pragmatic approach, since water connections (both legal & illegal) were
installed through plumbers, NMC decided to involve plumbers in detection of illegal
connections and its subsequent transfer into legal.
A security deposit of Rs 5000 was announced for licensed plumbers and the renewal fee
was increased from Rs. 25 to Rs. 30. After a protest by plumbers, it was agreed upon that
the security deposit would be waived off against an active participation by plumbers
towards the drive to detect and regularize illegal connection. A target of finding 35,000
illegal connections was set with an incentive of Rs. 50–100 per illegal connection.
The plumbers were organized into small teams, which conducted door-door survey, filled
simplified forms and collected charges as laid down by the NMC. Effective arrangements
were made, to accept application forms, sanction application, and accept requisite charges.
Awareness was disseminated about the drive through media.
About 25,000 (71%) illegal connections were detected and regularized within a period of
4 months. Revenue from water supply of the NMC also had recorded a substantial increase.
The quantity of water billed in 1998-99 was 163 MLD, whereas in 2002-03 the quantity
billed was 300 MLD, i.e., nearly double.
This initiative has brought the NMC closer to its goal of universal metering in the city.
The time-bound regularization scheme received tremendous response due to the
simplified procedures and reasonable charges. The citizen’s feedback as reported in the
media was very positive.
126
Box 3.5 Legalizing water in slum colonies – Bangalore
The BWSSB (Bangalore Water Supply and Sewerage Board) created a social development
unit within the utility to promote legal connections to the piped municipal water supply
as part of a much larger water sector reform strategy funded by the Australian Aid Agency
(AUSAID). Although the unit was created specifically to drive a donor-funded pilot project
in three slums, it has persisted beyond the end of the pilot, expanded its scope to a handful
of new slums, started planning for the entire city, and continued to generate great support
from the Chairman of the Water Board. These efforts provide an interesting case of how a
progressive unit within a reform minded organization can tackle the twin problems of
low access levels and illegal connections in slums.
When the social development unit embarked on its first effort to connect slums legally
to its piped network, it was clearly operating at the level and mindset of a pilot project.
The project had all the requisite nursing required to ensure its success. Three slums were
carefully chosen to reflect typical slum characteristics across the city: high density, legal
land tenure, and informal land tenure. The aim of the project was always to show that
slums can be connected with slum dwellers paying some share of the cost. To this end,
several measures were taken to lower the bar and ensure replicability. First, the water
board abolished the requirement for proof of formal land tenure. Second, pricing was
subsidized through a reduced connection fee, although the volumetric tariff rate
applicable citywide was not altered. Third, an institutional structure was developed in
which geographically situated sub-district engineers work closely with the head of the
newly created social development unit to extend the pipes, ensure water flow, maintain
pressure, and carry out water meter readings. Fourth, the board gained bargaining power
and leverage with slum dwellers after an amendment to its charter was passed making
illegal connections punishable by fine and imprisonment and the board embarked on a
controversial regularization drive.
Roughly 1,000 households were connected in the three pilot slums, though it is only a
very small proportion so far, the approach will over time be more than a mere policy
gesture. The case is thus a good example of how a public sector utility begins to meet its
obligations to serve the entire city, including slum dwellers.
3.9 Consumer awareness

One of the key challenges facing IMC is the low level of confidence amongst the consumers regarding
the services provided by IMC. It has also been observed that water is considered more as a social
good rather than an economic good. Awareness on water conservation is also minimal. Such a scenario
leads to water wastages, low willingness to pay and a poor perception of service provider.
Previous studies indicate that a recently implemented project for Over Head Tanks (OHTs) has reduced
the consumer complaints about inadequate water supply at reduced pressures in areas covered
under this project. This could be built upon by the Municipal Corporation for gaining back the
confidence of the consumers. It is, however, necessary to build consumer awareness on water use
and conservation. Enhanced consumer awareness shall also help IMC in getting greater co-operation
from the consumer and build a better understanding.
127
Education and the involvement of the general consumer is also an important aspect of any WDM
strategy. To tackle the above issues, it is imperative that the reform program includes a component
of IEC (Information, Education and Communication), which would motivate users to conserve water.
This shall also build awareness on the costs borne by IMC in water treatment and supply to household
and hence create a willingness to pay among consumers. It may further be necessary to build a
consensus among the various stakeholders on the reform programme that IMC may embark upon. It
is thus essential to involve stakeholders such as academia, resident welfare associations, prominent
NGO’s and independent experts in the project preparation and build consensus on the reform agenda.
Media should also be included extensively in such a process of consensus building.
A well-designed IEC campaign should thus be launched which aims at delivering certain key messages
to the consumers such as:
• Key issues plaguing water supply services and the need for reforms
• Water stress in the country and the need for conservation
• Rainwater harvesting: Need and approach
• Need to pay for water
• Need for metering and the procedures involved
• Regularization of connections
• Water conservation at household level
• Avoiding water leakages before and after the property line
3.9.1 IEC strategy

The IEC strategy should necessary look at informing various sets of consumers and bringing about a
behavioural change towards water demand management. Figure 3.7 gives a framework for an IEC
strategy for water demand management.
Source: UNICEF 2004
Figure 3.7 Framework for IEC strategy
128
3.9.2 Approach to IEC campaign
It is suggested that a step-by-step approach to IEC may be followed as given below:
• Step 1: Inform and build consensus among the IMC employees on the need for reforms and take
feedback.
• Step 2: Identify and map various stakeholders such as RWAs, NGOs, academia, researchers, media
etc and inform about the programme through workshops/stakeholder consultations.
• Step 3: Modify the strategy incorporating the suggestions received in Step 1 and 2 above.
• Step 4: Design IEC campaign for general public. It is suggested that a two-pronged approach is
adopted for such a campaign involving the use of mass media tools on one hand and a direct
interaction with the community groups through involvement of NGOs to inform the community
on various aspects of WDM. Exhibitions, documentaries, pamphlets, banners etc may also be
developed for IEC. In addition it is also recommended that RWAs and municipal councilors be
motivated to act as ambassadors for WDM.
• Step 5: Roll out IEC campaign in a phased manner.
3.9.3 Obstacles in implementation

Current levels of awareness on the subject are minimal. This may pose problems in selecting the
most appropriate media for dissemination of information. Bringing different stakeholders on a
common platform will also be challenging assignment.
3.10 Regulation
It is proposed that in the long run IMC may consider separating the policy formulation, regulatory
and service provision functions. An independent regulatory body for setting up of tariffs and ensuring
service levels has successfully been used in other infrastructure sectors and it may be worth exploring
the possibility of an independent regulator at state level for this purpose. However, detailed feasibility
study of any such initiative needs to be carried out. The section below brings out the possible role for
a regulator and the key features of the same.
3.10.1 Functions of a regulator

The existing water department is highly monopolistic in nature with no competition from any private
player in the sector and has the sole responsibility for providing safe drinking water in the city.
In such a circumstance, the regulatory authority is expected to have the following functions. These
functions could evolve over the path of transition of the economy from state of control to liberalized
competition. Its core functions should include:
• Price control
• Promotion of better operating efficiency
• Service standard specification and monitoring
• Control of externalities
• Maintenance of public good functions
• Ensure asset serviceability over time
129
• Ensure development of essential infrastructure
• Control over powers to manipulate land values/ land speculation
• Controls over unfair trading practices
• Safety net regulations
• Promote water use efficiency
• Ensure responsiveness to final customer needs
Its advisory role should include providing information to the government and advising the relevant
ministry on issues of importance or whenever the regulator’s advice is requested.
The role of a regulator is bound to change once the sector, or various segments in the sector,
undergoes changes from a monopolistic to a competitive structure. For example, in a competitive
market, the tariff setting function of a regulator may become ‘light’ or be ‘forbearing’. Thus, there is a
need to delineate the regulator’s role given the degree of competitiveness in the sector.
3.10.2 Other salient features

The following principles need to be kept in mind while designing the regulatory framework, to ensure
regulatory independence and to balance the interests of various stakeholders:
• Autonomy of the regulator
• Transparency and encouraging stakeholder involvement
• Predictability through well defined criteria for decision making and review of standards
• Flexibility by being open to alternative regulatory tools
• Consultative through consultation with all stakeholders for encouraging commitment and a better
understanding of the implications of the proposed action
• Independence through appointing representatives from the private industry and academic or
research institutions along with Judge of High Court or Member UPSC in the Selection Committee,
setting up of a Regulatory Commission Fund funded by grants/ loans by Govt., levy of fees on the
licensees
• Accountability through independent review and assessment of the regulatory body against the
specific objectives and an appeal mechanism in relation to the regulatory decisions
Box 3.6 describes the Maharashtra Water Regulatory Commission, which has recently been established
and is also the first regulator set-up in the water sector in India. Thus, it can be taken as a model for
setting up a water regulator in Madhya Pradesh. It is important to mention here that a regulator is
not feasible to be set-up at the city level. It is thus proposed that a detailed survey of the water sector
in the State is undertaken before a decision on the type of regulator as well as the exact functions
and features of a regulator are defined.
130
Box 3.6 Setting up of Maharashtra Water Regulatory Commission
Based on the recommendations of the Sukthankar Committee, a Maharashtra Water and Waste
Water Regulatory Commission (MWRC) has been established. The key functions of the
Maharashtra Water Regulatory Commission (MWRC) would be the following:
• Regulation of the quality of service being provided by local bodies and to be provided by
the licensed entities.
• Economic regulation of tariffs to be charged by the service providers (local bodies, CWSEs,
other service agencies such as MIDC, MJP, City and Industrial Corporation, and private sector
entities).
• Issue and regulation of licenses to the proposed CWSEs, in association with one or more
local bodies or other agencies such as the MJP and the MIDC. The MWRC will issue licenses
to all new entrants, including private operators, in the sector after following a transparent
procedure.
• Coordination with other regulators for environmental regulation, especially related to

drinking water quality and wastewater disposal standards.
• Collection and dissemination of sector information to enable the MWRC to establish good
regulations and to assist different interest groups, especially consumer councils, to recognize
improprieties by the local water supply entities.
• Regulation related to tariff setting are as follows:
– Tariff setting should ensure a fair charge to customers in relation to services consumed
and the commercial viability of the providers.
– The MWRC should establish mandatory guidelines and principles, such as recovering
costs for desired service levels, to help tariffs gradually move toward this goal. It should
conduct regular reviews of the tariffs set by local bodies and over time as more
information becomes available it should develop yardsticks to measure progress.
3.11 Organizational Restructuring

As discussed in sections above, the Indore Municipal Corporation is responsible for provision of water
supply services in Indore in line with the provisions of the Madhya Pradesh Municipal Corporations
Act 1956. IMC provides water supply services through the water works department, which is primarily
staffed with engineers most of which are on deputation from the Public Health Engineering
Department. Further there is ambiguity in the roles of various departments. Following broad
recommendations are suggested for consideration by IMC for improved service delivery. Each of
these would require brainstorming and stakeholder consultations to develop further.
1. Restructuring of the water works department with clear demarcations for planning, construction,
design, distribution O&M and plant O&M.
2. Reorganisation of the institutional structure in parallel with the proposed reorientation of the
distribution network into hydraulically discrete zones such that each function is taken care by
one engineer.
131
3. In addition it is important to clearly define roles for each functionary in the demand management
strategy and provide adequate training to carry out the desired tasks.
4. Further it is important to build in an incentive scheme for the employees to motivate them to
achieve improved efficiency.
5. Certain engineering posts may be re-designated as managerial posts in wake of the responsibility
to be assumed by these professionals after the reforms.
6. Creating special cells for functions, which have been neglected till date such as leak detection,
consumer grievances and database management.
This has been discussed in detail below:
GIS Cell
The Municipal Corporation has a computer wing. To set up the computer/GIS cell, the services of the
computer cell could be used. The computers and the software could be purchased and installed by
this wing. Hiring of specialized manpower for preparation and updation of GIS maps needs to be
undertaken.
Billing and collection

The function of billing has been outsourced to a private organization on Build-Operate-Own-Transfer
agreement basis. This agency has a completely computerized database and bills are distributed in
the city on a quarterly basis.
At present, the bill collection functions are being carried out in the zonal offices, head office, Indradoot
cell and recovery camps. On a short term basis, it is recommended to let this function be in the hands
of private players. To enhance financial recovery, introducing an incentive based approach could be
considered.
In the long term though it is suggested that the Municipal Corporation builds up capabilities to
integrate the billing and bill collection function under a special cell having the sole responsibility for
this function. This cell could either have billing and collection centres in each zonal office or use drop
boxes system for the convenience of the public in depositing their bills. Online facilities for bill payment
should also be developed.
3.12 Public-Private Partnership Arrangements

Public-Private Partnership (PPP) is widely looked upon as a solution to the failure of publicly owned
and managed utilities. It is important, however, to understand that private sector involvement cannot
of itself and by itself remove many of the barriers to efficiency, which impedes public sector operations.
The scope of private participation to yield performance improvements will partly depend upon the
way the Municipal Corporation is functioning presently. Also, the following four interrelated factors
play an important role in the achievements made by the private players:
• The form of private involvement (Table 3.5 gives details on the Indian experiences of Public-
Private Partnerships and Table 3.6 provides details of different models for PPP).
• The type of private company involved- this includes its technical and managerial competence,
the range of its operations etc.
132
• The post-privatization regulatory regime- this would include all the continuing roles of the public
sector and the institutions (contracts, regulatory agencies, laws, market tools etc.) employed to
influence, provide incentives for or to directly control private sector behaviour.
• It is however important to note that the involvement of private sector in the water sector is an
exceptionally difficult task.
The following characteristics of the water sector make the involvement of the private companies a
particularly challenging venture:
• The level of natural monopoly and the lack of substitute products.
• The public and merit goods supplied by the sector.
• The crucial relationship between water infrastructure and urban/economic development.
• The highly capital intensive nature of the sector and the over-whelming presence of sunk costs,
which increase private-sector risks.
• The multipurpose and hydraulically interconnected nature of the water resource itself.
For IMC, the privatization of assets is not recommended under the present circumstances. Instead, it
is proposed that Private sector should be involved in building the infrastructure and capacity building
of the MC. It is also recommended that an incentive based approach should be used for involving
the private sector since it would improve the services provided by the private sector party. Feasibility
of management contracts/BOOT arrangements for operation and management of water treatment
plants and distribution networks may however be explored.
On the basis of this discussion, certain recommendations for private sector involvement are proposed
below. It is important to realize that the choice of public-private arrangements would constantly
change over time. Thus, no specific long term strategies are proposed. It is however recommended
that a detailed study should be undertaken to study and identify the role of private sector in water
supply in Indore before taking a decision on the type of partnership that would be suitable in the
long run.
Building new infrastructure

Private Sector involvement for building of new infrastructure ranging from construction of pump
houses, water treatment plants, expanding the IT infrastructure or GIS mapping etc., should be
preferred as the IMC is not equipped to carry out such a task and building capacity for each task is
financially not practical.
Management of Services
Involvement of Private Sector for management of services is recommended only in the short and
medium run. For this, involvement of the private sector is envisaged in billing, collection and leak
detection and repair.
Maintenance of existing infrastructure

It is proposed that contracts could be given out to Private parties for maintenance of pump houses
and water treatment plants. Separate contracts could be given out for repairing and replacing of
pipelines wherever required, but this should be considered only in the short and medium term.
133
Table 3.5 Indian experience in Privatisation of Water Supply & Sanitation
Tirupur Water Supply • Implemented through a SPV New Tirupur Area Development Corporation (NTADC)
promoted by:
and Sewerage Project
– Infrastructure Leasing & Financing Services (IL&FS)
– Tirupur Exporters’ Association (TEA)
– Tamil Nadu Corporation for Industrial Infrastructure Development (TACID)
• Estimated Project cost – Rs. 900 Crores at 1998 prices (Rs. 1000 crore at present)
– O&M contract to consortium of
Mahindra & Mahindra
– United Utilities International
North West Water +Bechtel
– Attained financial closure with 10% stake by LIC & GIC.
Pune Water Supply and • Developed by Pune Municipal Corporation at a estimated project cost of Rs. 750 crores
($ 187.5 M) later revised to Rs. 392 Crores with HUDCO assistance
Sewerage Project
– Private Sector Participation envisaged in Construction, Operation and Maintenance,
Tariff collection
– Financial Participation in addition to HUDCO expected from IL&FS, ICICI, HDFC, IDFC
and Bank of Maharashtra
– Request for proposal sought
– Tie-ups: Anglian Water + Trafalgar House & Shirkes Binnie Black + Veatch & Thames
Water + L&T Krugger + Generale Des eaux & Shanska Int. Preussag + Tata Projects
Hyundai + Sundram Chemicals
Hanjin + Krupp and Zoom Development Group
– Political Risk – work re-tendered at RfP level
Bangalore Water • BOOT arrangement for sourcing 500 mld water.

Supply Project – Establishment of two Tertiary Water Treatment Plants (of total 60 mld capacity) with
HUDCO assistance
– Private Sector (Industries) to undertake laying of feeder mains
– envisages provision of 500 mld of water to the city on a BOT basis with estimated
project cost is Rs. 800 Crores (US$ 173 M).
Chennai Metro Water • Out of 119 Sewerage Pumping Stations, Operation & Maintenance of 70 by private sector
• Sourcing of water in 7 wells through private sector
• Construction of 300 mld Water Treatment Plant by – M/s Hindustan Dorr Oliver Ltd. and
O&M by M/s Richardson Cruddas
• New Chembarampakkam WTP of 530 mld capacity (over and above the existing 600 mld
capacity)
– Bid documents for BOT by TCS
– HUDCO funding availed
Karnataka Urban Water • Management Contract in Distribution and O&M
Supply and Drainage • Towns selected for the initiative are
– Mysore
Board (KUWS&DB)
– Mangalore
– Hubli – Dharwad
– Gulbarga
Others • Private Sector Participation on the anvil in water supply & sanitation
– Nagpur
– Dewas
– Kolhapur
– Cochin
– Vishakhapatnam
– Dharwad
– Goa
– Alandur
Source: Presentation on Innovative Infrastructure Financing by V Suresh, Director General, Good Governance India and
Former Chairman and Managing Director, HUDCO
134
Table 3.6 International examples of options for private sector participation and
allocation of responsibilities
Option Asset Operations Capital Commercial Duration Examples

Ownership & Maintenance Investment Risk
Service Contract Public Public and Private Public Public 1-2 Years Chile (Santiago)
India (Chennai)
Management Contract Public Private Public Public 3-5 Years Gaza
Trinidad and Tobago
Lease Public Private Public Shared 8-15 Years Guinea (17 cities)
Poland (Gdansk)
Build- Operate- Transfer Private Private Private Private 20-30 Years Malaysia (Johor)
(bulk services) Australia (Sydney)
Concession Public Private Private Private 25-30 Years Argentina
(Buenos Aires)
Cote d’Ivoire
Philippines (Manila)
Divestiture Private Private Private Private Indefinite England and Wales
135
Annexures
A-1
Annexure 2.1
Existing Tariff Schedules in Chennai, Bangalore and Delhi
Chennai
Category Qty. of water Rate/KL (in Rs.) Minimum rate chargeable (including sewerage charges) (in Rs.)
Domestic
Residential upto 10 KL 2.5
(i) Domestic Residential premises (other than 11 to 15 KL 10 50/- per month per dwelling unit
flats or block or line of houses) 16 to 25 KL 15
Above 25 KL 25
upto 10 KL 2.5
(ii) Flats or houses in a block of flats or line of
houses respectively used wholly for residen- 11 to 15 KL 10 50/- per month per flat
tial purposes
16 to 25 KL 15
Above 25 KL 25
(iii) Individual flats or houses in a block of flats or Partly commercial – Rs. 150/- p.m. per flat
line of houses respectively used for other
than residential purposes Non water intensive – Rs. 400/- p.m. per flat
Water intensive – Rs. 650/- p.m. per flat
Private hospital – Rs. 800/- p.m. per flat
Institutional – Rs. 300/- p.m. per flat
Pvt. Educational Instn. – Rs. 400/- p.m. per flat
A-3
A-4
Private hospital – upto 500 KL Rs. 800/- * (Water Intensive)
Rs. 50/KL
B. Commercial
All others upto – 500 KL Rs. 400/- (Non-water intensive)
Rs. 35/KL
Private hospital – above 500 KL

Rs 80/KL for entire quantity Rs. 800/- *(Water intensive)
All others – above 500 KL Rs. 650/- * (Water intensive)

Rs. 60/ KL for entire quantity
C. Partly Commercial Upto 10 KL Rs. 5

11 to 15 KL Rs. 15 Rs. 150
above 15 KL Rs. 25
Rs. 400
D. Institutional 1) Pvt. Edn. Institution Rs. 40.00/KL entire quantity Rs. 200
2) Govt. Hospital Rs. 20.00/KL entire quantity Rs. 300
3) All others Rs. 30.00/KL entire quantity
E. Municipal bulk supply Entire consumption Rs. 15 –
Entire consumption Rs. 7.00 (wherever local

E (I) Municipal bulk supply bodies met the cost of –
infrastructure)
* Sewerage charges 25% on water supply charges wherever sewer connections are provided.
* Water intensive means premises used fully or partly as theatres, hotels, boarding houses, lodges, clubs, private hospitals, private hostels, kalyanamandapams, clinics with inpatient facility, swimming baths,
places for keeping animals, vehicle service stations, nurseries.
i. Hydrant and public fountains Rs. 400/- per month including maintenance charges
ii. Maintenance charges
F. 1) Mobile water supply to slums Rs. 4/- per 1000 litres for entire quantity supplied
2) Maintenance charges for steel tanks Rs. 200/- per month per tank
G. Casual water supply
Mobile water supply to customers
i. Domestic (including hostels of colleges Rs. 400 per load of 6000 litres/- Rs. 600/- per load of
and schools recognised by state/central govt./ 9000 litres/ Rs. 670/- per load of 10000 litres
govt. Qtrs. etc.)
ii. Partly commercial
a) Domestic purpose Rs. 400/- per load of 6000 litres/Rs. 600/- per load of
9000 litres/Rs. 670/- per load of 10000 litres
b) Other than domestic purpose Rs. 510/- per load of 6000 litres/Rs. 765/- per load of
iii) Commercial (including private hospital) Rs. 510/- per load of 6000 litres/Rs. 765/- per load of
A-5
iv) Institutional
A-6
142
a) Private educational institution including hostels Rs. 510/- per load of 6000 litres/Rs. 765/- per load of 9000 litres/Rs. 850/- per load of 10000 litres
b) Govt. offices/schools/colleges/hospitals etc. Rs. 400/- per load of 6000 litres/Rs. 600/- per load of 9000 litres/Rs. 670/- per load of 10000 litres
v. ) Water supply at Metro water filling points
a) Domestic (including govt. schools/colleges/office Rs. 400/- per 1000 litres

institutions/ hospitals)
b) Commercial (including private hospitals/private Rs. 60/- per 1000 litres

educational institutions)
vi.) For the employees of the Chennai Metropolitan

Water Supply and Sewerage Board who desires to Rs. 200/- per load of 6000 litres
avail the lorry water supply for their own house hold
requirements, the cost will be calculated at Rs. 300/- per load of 9000 litres
actual cost price
H. Hire charges for tanks hired out Rs. 250/- for two days and Rs. 50/- for every additional day
Unmetered consumer tariff Water charges/Month (including sewerage charge)
Category
A. Residential
(I) Domestic residential premises

(other than flats or block or line of houses) Rs. 50/- p. m. per dwelling unit
(ii) Flats or houses in a block of flats or line of houses Rs. 50/- p. m. per flat
respectively used wholly for residential purposes
(iii) Individual flats or houses in a block of Partly Commercial Rs. 150/- p.m. per flat
flats or line of houses respectively used
for other than residential purposes Non water intensive Rs. 400/- p.m. per flat
Water intensive (all others)
Rs. 650/- p.m. per flat
Private Hospital Rs. 800/- p.m. per flat
Institutional Rs. 300/- pm. per flat
Pvt. Educational Instn. Rs. 400/- p.m. per flat
B. Commercial Water intensive

Private Hospital Rs. 800/- p.m
All others Rs. 650/- p.m.
Non water intensive
All others Rs. 400/- p.m.
C. Partly Commercial Rs 150 p. m.
D. Institutional I) Pvt. Educational Institution – Rs. 400/- p. m.
ii) Govt. Hospital – Rs. 200/- p. m.
iii) All others – Rs. 300/- p. m.
E. Public supply tubewell pumps or mark II pumps Rs. 40/- p. m.
A-7
143
Bangalore
A-8
144
Domestic
(filtered water)
Category and Consumption (KL) Rs/KL Minimum charges (in Rs.)
I. Domestic
(Section 36[1])
1) 0 – 8000 6.00 48.00
2) 8001 – 25000 9.00 201.00
3) 25001 – 50000 15.00 676.00
4) 50001 – 75000 30.00 1326.00
5) 75001 – 100000 36.00 2226.00
6) 100001 & above 36.00 5826.00
Sanitary charges for (I) Rs. 15.00 at flat rate for consumption
domestic connection of 0 to 25000 liters
(ii) From 25001 to 50000 liters 15%
on water supply charges per month
(iii) 20% of water supply charges per month
against for consumption of above 50000 liters
II. Non-domestic
1) 0 – 10000 36.00 360.00
2) 10001 – 20000 39.00 390.00
3) 20001 – 40000 44.00 880.00
4) 40001 – 60000 51.00 1002.00
5) 60001 – 100000 57.00 2280.00
6) 100001 & above 60.00 NA
Industries Rs. 60.00
III Bidadi Industrial Area Rs. 51.00
IV Lorry loads Rs. 250.00
V Swimming pools Rs. 60.00
VI Public taps Section 36 VII Rs. 3000.00
Sanitary charges
I Domestic connection
Rs. 15/- at flat rate for consumption of 0 to 8000
liters and 8001 to 25000 liters
Rs. 15% of water supply charges per month for

consumption of above 25000 liters upto 50000
liters
Rs. 20% of water charges per month for

consumption of above 50000 liters
II All non-domestic connection From 10% to 20% of water charges for month
For premises having water supply and

III
UGD connection but supplementing water
supply for tanker/borewells Bidadi Industrial
Area
a. Domestic and apartment Rs. 50/- per month per individual house per flat.
Revised from Rs. 200 to 300 per month per HP of
b. Non-Domestic borewell
IV Premises not having water supply Rs. 300/- per month

connection from BWSSB but having only
UGD connection in addition to sanitary
charges
A-9
145
Hotels having boarding and lodging
146
V
A-10
supplementing water supply by tankers in
addition to borewells
(I) Non star hotels Rs. 1000/- per month
(ii) 3 star hotels and above Rs. 3000/- per month
(iii) 5 star hotels and above Rs. 10000/- per month
VI For hospitals/nursing homes supplement-

ing water supply by tankers in addition to
borewell
(I) Nursing home & hospitals having 100 Rs. 2500/- per month
beds
(ii) Hospitals/nursing homes having more Rs. 5000/- per month

than100 beds
Delhi
Category I (Domestic) Category II (Commercial) Category III (Industrial)

Consumption Rs. (B) Consumption Rs. (B) Consumption Rs. (B)
(per month) per KL. (per month) per KL. (per month) per KL.
Upto 6 KLs 0 Upto 25 KLs 10.00 Upto 25 KLs 15.00
7 – 20 KLs 2.00 Above 25 KLs and 20.00 Above 25 KLs and 25.00
upto 50 KLs. upto 50 KLs.
21– 30 KLs 7.00 Above 50 KLs 30.00 Above 50 KLs and 35.00
upto100 KLs.
Above 30 KLs 10.00 Above 100 KLs. 50.00
The second part of the tariff is volumetric Water Charges is based on actual consumption and to be calculated as 1.5 B X
Hence, the bill will be calculated as follows :
1. P= M + 1.5 B X Where, M= Minimum service Charges

B= Block tariff rates per KL.
X= Units consumption in KL.
P = Total Bill.
• M =Minimum service charges (Rs.)
• B= Block tariff rate per KL (Rs./KL.)
• X= Units consumed in KLs. (Number)
2. 50% of water consumption charges is towards sewerage maintenance.

3. In addition, water cess charges shall continue to be recovered at the previous rate of 2-paise per KL. till revised by the Central Govt./ DJB.
4. Meter Maintenance (Rent) charge @ Rs. 10.00 p.m. in case of DJB supplied water meters after expiry of warranty period.
147
A-11
Annexure 3.1
Rationale for Reforms in urban water supply sector
Investment Requirements
Public expenditure on urban water supply and sanitation accounts for 1.2% to 1.8%(10th Five Year
Plan/latest figures) of the total plan investments, and is significantly short of requirements. For
example, notwithstanding an aggregate budgetary investment of Rs. 243.41 billion in the urban
water and sanitation sector over the successive five year plans investment gaps are large. According
to estimates of the Rakesh Mohan Committee total requirement for urban infrastructure development
covering backlog, new investments and O&M costs for the next ten years is Rs. 2,50,000 crores
(US$ 57 Billion). The ninth Plan proposal identifies only around Rs. 12000 crores. With anticipated
growth in Tenth plan providing additional funds of Rs.13,000 crores, the total expected plan outlay
comes to Rs. 25,000 Crores (US$ 5.7 Billion) which is one tenth of the project requirements.
A direct consequence of inadequate provision is manifested in sharp deterioration of service levels.

Economic and social costs of under-provision of water are also assessed to be extremely high
(Mathur,www.fiscalconf.org/papers/mathur.pdf )
To meet the huge requirements of funds for the improving infrastructure the urban local bodies
thus need to look at alternate source of funding which may include external donors/banks
(World Bank, OECF, ADB , DFID etc) or institutional investors like HUDCO/LIC etc. Further in the long
term the municipal corporation may also need to tap funds from the markets by using instruments
such as municipal bonds or by tapping funds from commercial banks. As a prerequisite to tapping
these extra source of funding it may be necessary for the local bodies to put in place institutional
and policy reform initiatives in the form of better governance systems, performance monitoring and
improved financial management.
National/State policy directives on reforms in water sector
National Water Policy 2002

India’s National Water Policy 2002 has clearly identified the need for improvements in the
management of water sector in the country and has identified the need for reorientation of the
current institutional structure of the sector in a manner which promotes a multi sectoral,
multidisciplinary and a participatory approach while giving special attention to the management/
O&M of water resource schemes (Box 1).
Box 1
With a view to give effect to the planning, development and management of the water
resources on a hydrological unit basis, along with a multi sectoral, multi disciplinary and
participatory approach as well as integrating quality, quantity and environmental aspects,
the existing institutions of various levels under the water resources sector will have to be
appropriately reoriented / reorganized and even created wherever necessary. The institutional
arrangements should be such that maintenance of water resources is given importance equal
or even more than that of new construction.
Source: National Water Policy, Ministry of Water Resources, Government of India
A-12
148
City Challenge Fund
The Ministry of Urban Development, Government of India is encouraging citywide reforms and
restructuring so as to ensure that cities are managed efficiently and become creditworthy (to attract
private finance) which will enable them to prepare long term plans for infrastructure investments
and implement poverty alleviation programmes. For the implementation of these reforms the Ministry
of Urban Development has proposed to set up a performance based City Challenge Fund for
catalyzing city level economic reform programmes. Access to the fund would be on a competitive
basis.
Urban Reform Incentive Fund

The Urban Reform Incentive Fund (URIF) has been created with a corpus of Rs 500 crores per annum
as Additional Central Assistance for reform linked incentive to State Government. URIF is a state level
incentivization programme. It seeks to incentivize State Governments to follow a certain reform
programme decided by the Government of India. The incentive under URIF is provided as 100 per
cent Grant to the States and Union Territories entering into a Memorandum of Agreement with the
Central Government addressing the first phase reform. The first phase reforms are proposed for a
number of areas inclusive of the following:
• Introduction of computerized process of registration.
• Levy of reasonable user charges, with full cost of O&M being collected by the end of the 10th plan
period.
• Introduction of a double entry system of accounting.
MoUD Initiatives
MoUD also proposes certain regulatory frameworks, which should be brought into effect in the water
supply and sanitation sector. It also proposes to draw up guidelines for Public-Private Partnership to
encourage PPP in infrastructure development (Box 2).
Box 2
Regulatory Framework
The participation of the private sector in financing and the delivery of infrastructure at the
municipal level, especially in the water and sanitation sector, requires a regulatory framework
to protect consumers, apply environmental standards and support the delivery to the poor.
As there are a variety of models of regulation from centralized to decentralized systems,
guidelines will be developed at the National level to ensure consistency across the country.
Appropriate training programmes and capacity support to regulators will also be developed
in partnership with the private sector and urban research institutions.
Public-Private Participation Guidelines
Central Government will develop guidelines for involvement of the private sector in
infrastructure, which will ensure competitive biding process in a transparent manner.
These guidelines will not only protect the consumers but also ensure integrity of the process.
This would support municipalities in designing the PPP process on the lines of the BOT Centre
in Philippines or the PPP in the Ministry of Finance in South Africa.
Source: Urban Reforms, Ministry of Urban Development, Govt of India
A-13
149
Jawaharlal Nehru National Urban Renewal Mission
The need of the hour in most cities is to introduce and sustain reforms, and improve service delivery
efficiencies with a focus on minimizing costs, maximizing revenue, and allocating resources in the
most optimal manner, all of which are possible in the existing institutional framework. National Urban
Renewal Mission, about to be launched by the government, will be completely “reform driven” with
eligible cities having to belong to states that have displayed reforms in terms of repeal of Urban
Land (Ceiling) Regulation Act, reform of rent control acts, rationalization of stamp duties to not more
than 5% over the next five years, introduction of independent regulators for urban services, levy of
reasonable user charges for basic urban services, constitution of Citizen Advisory Groups to guide
urban reforms’ processes, and e-governance, among others.
The funds allocated under this mission come from a combination of Central Government, State
Government and also as loans from Financial Institutions. The release of Central assistance would be
linked with implementation reforms. The Mission includes a list of mandatory and optional reforms
of which States and Urban Local Bodies (ULBs) are required to implement all mandatory reforms.
In addition, States & ULBs are required to implement any five optional reforms in the first year.
A summary of the various national programmes and policies related to urban water supply in India
over the years is given in Table 1 below.
Table 1 Various policy instruments/programmes used in the urban water supply sector in India
Year Policy/Act/Programme Highlights

1974 Environmental Improvement of
• The scheme is applicable to notified slums in all urban areas.
Urban Slums (EIUS) Scheme
• Aims at provision of basic amenities like water supply and
sanitation.
• The EIUS scheme was made as an integral part of the
Minimum Needs Programme in 1974.
1979 Integrated Development of • The scheme was initiated with a view to augmenting civic
Small and Medium Towns (IDSMT) services.
• Strengthening municipalities through promotion of
resource generating schemes.
• Reducing migration from rural areas to larger cities by
providing sufficient infrastructure facilities, including water
supply.
1986 Centrally sponsored Rural • Provide technical and financial assistance to states to
Sanitation Programme (CRSP) implement rural sanitation programmes under the
Minimum needs programme.
1986, Urban Basic Services Scheme
• The primary objective was improving the standard of living
1990/91 (UBSS) (1986) / Urban Basic
of urban low-income households, particularly women and
Services for the Poor
children through the provision of sanitation and social
Programme (UBSP) (1990/91)
services in slum areas.
• In 1990/91, the scheme was integrated with the EIUS and
came to be known as the Urban Basic Services for the Poor
(UBSP) programme.
A-14
150
1991 Rajiv Gandhi National Drinking • The Accelerated Rural Water Supply Programme (ARWSP)
Water Mission (RGNDWM) under the (RGNDWM) assists the States and Union
Territories (UTs) to accelerate the pace of coverage of
drinking water supply.
1992 73rd and 74th Constitution • A three-tier system of local governance, through Panchayati
(Amendment) Acts Raj Institutions (PRIs) in rural areas and through Urban Local
Bodies (ULBs) in urban areas was established.
• State legislatures were empowered to entrust local bodies
with necessary power and authority to enable them to
function as institutions of local self-government.
• State Finance Commissions were to be set up to provide
for sharing of revenues between State and local bodies.
• The urban and rural local bodies are now responsible for
Water supply and sanitation.
1993/94 The Accelerated Urban Water

• The Programme was initiated by the MoUDPA to provide
safe and adequate water supply facilities to the entire
Supply Programme (AUWSP)
population of the towns having population less than 20,000
as per 1991 Census. 50% of the finance for the urban water
schemes is provided by the Union Government and the
rest by the State Government.
1996 National Slum Development • Additional Central Assistance is being released to States/
Programme (NSDP) Union Territories for the development of urban slums.
• Objectives of the programme include provision of
adequate and satisfactory water supply, sanitation, shelter
upgradation, garbage, and solid waste management in
slums.
• Focus areas of the NSDP include development of
community infrastructure, empowerment of urban poor
women and involvement of NGOs and other private
institutions in slum development.
2002 Urban Reforms Incentive Fund • Rs 500 crore to provide reform linked assistance to States
on:
• Revision of municipal laws in line with model legislation.
• Levy of realistic user charges and resource mobilisation by
urban local bodies.
• Initiation of public private partnership in the provision of
civic services.
2002 City Challenge Fund • Support to mega cities for transitional cost.
• Partial cost of developing an economic reform programme
and financially viable projects undertaken by the ULBs.
2002 National Water Policy • Drinking water should be priority in planning and
operation of systems.
• Maintenance of existing water resources schemes would
be paid special attention under these institutional
arrangements.
151
A-15
2005 National Urban Renewal Mission • Participatory approach should be adopted and water user
associations and local bodies should be involved in
operation, and maintenance to lead to eventual transfer of
management to the local bodies/user groups.
• Private Sector Participation should be encouraged in
planning, development and management to introduce
corporate management and improve service efficiency.
• A standardised national information system with a network
of data banks and data bases, integrating and
strengthening the existing Central and State level agencies
should be established.
• Exploitation of ground water resources should be so
regulated as not to exceed the recharging possibilities as
also to ensure social equity.
• The thrust of this mission is on urban infrastructure and

basic services for the poor. This mission plans to cover only
63 cities including 7 mega cities, 28 million plus cities, and
28 other cities over a five year period. The mission proposes
an agreement between the states, urban local bodies and
the central government to undertake reforms before
delineation of funds from NURM to the ULBs.
State Government directives
MP State Water Policy

The Madhya Pradesh state water policy also advocates institutional reforms including better
coordination mechanisms and inclusion of demand side perspective in water management along
with developing a reliable information system for better management and decision-making.
Box 3
Present information and data network including data of processing capabilities should be
improved to make it broader, modern and effective. Emphasis should be given for greater use
of Remote Sensing technique. It should be made mandatory for users and regulatory
departments to maintain all necessary data for compilation of storage of surface and ground
water…..
…..The water resources planning structure which is at present based on water availability
should be correlated with demand base of water distribution and necessary institutional
reforms be taken.
Source: State Water Policy, Madhya Pradesh, 2003
10th Five Year Plan (Draft)

The State Government has published its own Draft 10th Five-Year Plan 2002-2007 in May 2002.
“The Plan recognizes the importance of people in the process of development. It further lays emphasis
on “decentralization, greater accountability, and increasing space for direct community action”.
A-16
152
MP Municipal Corporation Act 1956 (With amendments)
The Madhya Pradesh Municipal Corporation Act came into existence in 1956. Since then, all Municipal
Corporations in the State are governed by this Act. The Act vests the powers for management and
maintenance of all water works and the construction and maintenance of new works to the Municipal
Corporations across the state. Further, it also directs the Municipal Corporation to find means for
providing a sufficient supply of suitable water for public and private purposes.
It further defines the composition of the Municipal Corporation. The State has the provision to
nominate persons having special knowledge and experience in the municipal affairs to be a part of
the Municipal Corporation. Also, according to the act’s mandate, a Mayor-in-council has to be brought
in place in the city, which leads the pathway for public participation. Wards Committees/ Zonal
Committees also need to be constituted by, as a step towards a decentralized approach.
In lieu of the above policy directives it may be necessary for the Municipal Corporations to undertake
reforms aimed at improving the efficiencies and demonstrate that its operations and sustainable
even for attracting funding from the government and also the institutional sector/external donors.
153
A-17
Bibliography
Delhi Water Supply Project – Project preparation, Delhi Jal Board, Final Report, Part A, Volume I
(Main Report), submitted by Pricewaterhouse Coopers in association with DHV consultant, The
Netherlands and TCE Ltd. July 2005.
Integrated Urban Development in Madhya Pradesh (IUDMP)ADB TA No. 3759–IND, Draft Final Report,
Volume 2 – City Reports Bhopal.
Management of change – A guideline to analyzing change projects, Per Lind.
Regulation and Private Participation in the Water and Sanitation Sector, Judith A. Rees, Global Water
Partnership, Technical Advisory Committee (TAC).
UNICEF, Programme Division,Water, Environment and Sanitation Technical Guidelines Series No. 7.
A Manual on Communication for Water Supply and Environmental Sanitation Programmes,
UNICEF 1999.
Water Demand Management Cookbook; RS McKenzie: WRP Pty Ltd. H Buckle: Rand Water, WA Wegelin:
WRP Pty Ltd. and N Meyer: WRP Pty Ltd
A-18
Contacts Sewaram
Secretary
Urban Administration and Development Department
Kalyan Ray Government of Madhya Pradesh
Senior Advisor Vallabh Bhawan, Bhopal 462004
Office of the Executive Director Madhya Pradesh, India
United Nations Human Settlements Programme (UN-HABITAT) Tel: (91-755) 2551836
P.O. Box 30030, Nairobi, Kenya Fax: (91-755) 2553717
Tel: (254-20) 7623039, 7623781 E-mail: sewaramsarangal@hotmail.com
Fax: (254-20) 7623588
E-mail: kalyan.ray@unhabitat.org Hari Ranjan Rao
Project Director
Andre Dzikus Urban Water Supply and Environmental
Programme Manager Improvement Project (UWSEIP)
Water for Cities Programme Government of Madhya Pradesh
United Nations Human Settlements Programme (UN-HABITAT) Beej Bhavan, Arera Hills, Bhopal 462001
Water, Sanitation and Infrastructure Branch Madhya Pradesh, India
P.O. Box 30030, Nairobi, Kenya Tel: (91-755) 2763060/61/62
Tel: (254-20) 7623060, 7625082 Fax: (91-755) 2763868
Fax: (254-20) 7623588 E-mail: raohariranjan@yahoo.com
E-mail: andre.dzikus@unhabitat.org
Kulwant Singh Water Resource Planning and Conservation (WRP)

Chief Technical Advisor Upper Level, Block 5, Green Park Estate
Water for Asian Cities Programme 27, George Storrar Drive, Groenkloof
United Nations Human Settlements Programme (UN-HABITAT) Pretoria, South Africa, 0181
WAC Regional Office Tel: (27-12) 3463496
EP 16/17, Chandragupta Marg Fax: (27-12) 3469956
Chanakyapuri, New Delhi 110021, India E-mail: wrp@wrp.co.za
Tel: (91-11) 42225019, 42225022
Fax: (91-11) 24104961 The Energy and Resources Institute (TERI)
E-mail: kulwant.singh@unhabitat.org India Habitat Centre, Darbari Seth Block
Lodhi Road, New Delhi 110003, India
Aniruddhe Mukerjee Tel: (91-11) 24682100
Chief Technical Advisor Fax: (91-11) 24682144
Water for Asian Cities Programme E-mail: mailbox@teri.res.in
United Nations Human Settlements Programme (UN-HABITAT)
E-1/191, Arera Colony, Bhopal 462016 Shri S.G. Institute of Technology and Science (SGSITS)
Madhya Pradesh, India 23, Shri M. Visvesvaraya Marg (Park Road)
Tel: (91- 755) 2460835, 2460836 Indore 452003
Fax: (91-755) 2460837 Madhya Pradesh, India
E-mail: aniruddhem@yahoo.com Tel: (91-731) 2544415
Fax: (91-731) 2432540
E-mail: director@sgsits.ac.in
www.unhabitat.org/water
www.unwac.org

Water Demand Management Strategy and Implementation Plan For INDORE

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Water Demand Management Strategy and Implementation Plan For INDORE

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Water for Asian Cities Programme

The Energy and Water Resource Planning Government of

All rights reserved

United Nations Human Settlements Programme (UN-HABITAT)

Jayant Kumar Malaiya

I am pleased to learn that UN-HABITAT has developed a strategy and action

Jayant Kumar Malaiya

The Publication presents a comprehensive reforms package by developing Water Demand

ADB Asian Development Bank

Water Demand Management Strategy

Item Short Term Recommendations Long Term Recommendations

Domestic It is recommended that two or three pilot No recommendations on the long-

The domestic metering “Pilot Projects” will

Pressure It is recommended that the water pressure be No long term recommendations

Once pressure information is available it

Mains It is recommended that a single policy It is recommended that the value

Planned It is recommended a valve audit be undertaken It is recommended that all

All butterfly valves being used on a daily basis

Education The effectiveness of the “Indraroot” cell as a The possibility of incorporating

A schools water saving campaign should be

The utility should undertake a full scale

Prepare plan books for operations staff.

A GIS team should be established to capture

Training on the operation and maintenance

Legislation Local bye-laws are required to encourage Provincial or national legislation is

The bye-laws must be enforced with vigour.

Implement a continuous leak survey and repair

1.1 Purpose of this Report

1.2 Project Area

• Average annual rainfall = 900 mm

• Length of mains = ±1400 km

– House : 136 730 – 155 889

• Population = ±1.66 million (2002)

• Service Reservoirs = 34 (Number) with storage capacity 76 Ml

• Area = 214.1 km2

Table 2: Details of water sources available to Indore

Approx. Daily Supply (Ml/day)

1.3 Water Demand Mamagement Strategy

• District Meter Areas (DMAs);

• Bulk Management Meters;

• Bulk Revenue Meters;

• Domestic Consumer Meters;

• Monitoring of Unaccounted-for Water in each Zone;

• Mains Replacement Programme;

• Active and Passive Leakage Control;

• General Education and Public Involvement;

• Payment for Water and Illegal Use;

• Retrofit Internal Plumbing.

2.1 District Metered Areas (DMAs)

The procedure of implementing District Metered Areas (DMAs) is described below.

Sectorisation: Short Term

Sectorisation: Long Term

Bulk Management Meters: Short Term

• Meters should be installed at selected positions on the trunk mains as shown on

Meters at Water Purification Plants

1 Narmada 185 172 to 185 1200 and 600 1200 3

2 Deodharan 40 18 to 27 700 2 X 650 3

3 Bilawali Tank 9 0 to 4.5 Unknown Unknown 1

Bulk Management Meters: Short Term

Table 4: Proposed bulk management meters

No. Trunk Main Description Pipe Size Meters

1 Trunk Main #2 Trunk Main from Jalud 1200 3

2 Dewas Line Trunk Main to Dewas Town 520 1